SOURCE: The St. Petersburg Times
DATE: Issue #667 (34), Tuesday, May 8, 2001
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TITLE: Putin Named 'Enemy' of Journalists
PUBLISHER: Staff Writer
TEXT: The New York-based Committee to Protect Journalists has named Russia's president among its top 10 Worst Enemies of the Press for 2001.
 Vladimir Putin came in fifth on the list after Iranian Ayatollah Khamenei, Liberia leader Charles Taylor, Chinese Premier Jiang Zemin and Zimbabwean President Robert Mugabe.
 Ukrainian President Leonid Kuch ma has also enjoyed the dubious distinction of making it into the top 10: He came in seventh, sandwiched between Carlos Castano, head of the United Self-Defense Forces of Colombia, and Cuban leader Fidel Castro, a seven-year veteran of the list.
 The Committee to Protect Journalists (CPJ), which compiles the list annually, published this year's version on May 3. The CPJ targets those leaders who in its estimation are responsible for the world's worst abuses against the media.
 "We hope that by naming these 10 press tyrants, we can focus world attention on their deeds and, by exposing them, bring about change," said Ann Cooper, CPJ executive director, in remarks posted alongside the list on the committee's Web site.
 "President Putin, for example, pays lip service to press freedom in Russia, but then maneuvers in the shadows to centralize control of the media, stifle criticism, and destroy the independent press," Cooper added.
 The presidential administration declined to comment on Monday.
 Justifying Putin's inclusion, the CPJ cited what it called "an alarming assault on press freedom in Russia." It mentioned censorship in Chechnya, legal harassment of private media outlets, and increased surveillance powers granted to the security services. 
 "Despite Putin's professed goal of imposing the rule of law, numerous violent attacks on journalists have been carried out with impunity across Russia," the CPJ Web site says. Since 1991, around 200 journalists have been killed in Russia.
 It also mentioned the recent Gaz prom takeover of Vladimir Gusinsky's NTV television.
 "Despite Gazprom insistence that the changes were strictly business, the main beneficiary was Putin himself, whose primary critics have now been silenced."
 Vsevolod Bogdanov, head of the Russian Union of Journalists, said that he was sorry that Putin was in the top 10, but added he could find no reason to argue with the CPJ's decision.
 "I would have named not the president but rather his [administration], which is responsible for developments concerning the media," Bogdanov said in a telephone interview on Monday. "It turns out that what Putin says about the press is very different from what actually happens."
 "When [Boris] Yeltsin was in power, the situation was different. Some times, I was very surprised at how stoical he was toward criticism. The authorities these days are trying to regulate everything."
 However, Leonid Kesselman, a political analyst at the Russian Academy of Sciences, said that the situation with media freedom in Russia was not as bad as the CPJ was painting.
 "Even if [Putin] has been trying to get rid of freedom of speech, he has not succeeded in doing so," Kesselman said by telephone on Monday.
 Anna Sharogradskaya, head of the St. Petersburg branch of the Press Development Institute, said that Putin was not the media's main problem. 
 "I think that the most serious enemy for the media is itself," Sharogradskaya said Monday. "It is not a [unified entity], and has too many temptations."
 "Of course, Putin has made his contribution to the destruction of the media, but he is not the only one."
 Putin has often said that freedom of speech and democracy are in no danger. In a much-publicized online interview held earlier this year, the president said that while he was in power, "[Russia] will stay firmly on democratic paths of development."
 But Bogdanov said that the CPJ was also influenced by meetings its members had had with Press Minister Mikhail Lesin. He quoted Lesin as saying that Russian journalists were "bearers of information, but not [a part of] public opinion."
 Bogdanov also said that the situation with regional media was as bad, if not worse, as their national counterparts. He said that regional authorities were behaving more heavy-handedly to local press and television outlets since the NTV saga.
 "There is an [internal Union of Journalists] report for last month about the situation in Russian press," he said. "[It is] 1,500 pages long, and each page describes some tragic situation with the media in the regions."
 By way of example, Bogdanov pointed to the case of a small newspaper in the Lipetsk region, Lebedyanskaya Yarmarka, which was shut down by the local authorities.
 The father of the paper's editor sold his house to finance the relaunch, but the authorities blocked access to printing houses, he said.

TITLE: WWII Convoy Rescue Veteran To Be Honored
PUBLISHER: Staff Writer
TEXT: Valentin Dremlyug was on board a small ship patroling the Barents Sea in July 1942 when an Allied convoy carrying supplies to the Soviet Union came under attack. His ship rescued more than 100 American and British sailors from the Arctic waters. 
 Dremlyug, now 82, is the only surviving veteran of that heroic rescue operation 59 years ago. 
 On Wednesday, when Russia celebrates victory over Nazi Germany, the U.S. Defense Department will honor Dremlyug with a Commendation for Meritorious Humanitarian Service. The award will be presented by U.S. Consul General Paul Smith in a ceremony aboard the Russian icebreaker Krasin. 
 Arctic Allied Convoy PQ-17 was among the greatest tragedies at sea during World War II. From July 2 to 28, 1942, German submarines and bombers sank 24 of the 34 U.S. and British ships that were carrying supplies to the Soviet port of Murmansk. 
 Dremlyug was one of 24 sailors on ice patrol aboard the hydrographic ship Murmanetz, which happened to be the only vessel close to the area where the convoy was attacked, near Novaya Zemlya island. 
 Following an order from the Soviet navy, Murmanetz captain Pyotr Kotzov headed to the spot. His crew took on survivors from the Alcoa Ranger, Olopama, Washington, Hartlebury and Paulus Potter.
 "It was a terrible sight as we approached the spot of the massacre," Dremlyug said.
 "One of the sunken ships had been carrying sacks of flour, which did not sink. So the water surface was covered with hundreds of those huge sacks, burning oil slicks, wreckage, and the contorted bodies of mostly dead seamen in bright orange life jackets floating among all that mess." 
 From July 13 to 17, the small wooden vessel - little more than 30 meters long - took on board 147 sailors. Most of them were those who had made it into lifeboats, while little hope was held out for those left floating in their life jackets in water of 3 degrees to 5 degrees Celsius. 
 "However, we picked up everybody we could and about 20 seamen taken on board were dead," Dremlyug said. "People lay side by side in a row on our deck, in cabins, the cloakroom, dining room, radio room and wheelhouse of the ship, which was close to overflowing from the weight. Our cook was endlessly boiling tea and coffee in our huge soup kettles for the frozen, moaning men, who were in a state of shock." 
 Only one member of the Soviet crew spoke English, but the sailors were in such bad condition that they had no strength even to say "thanks," Dremlyug said. 
 However, he still holds onto the memory of a red-cheeked boatswain from the Olopama, one of 12 sailors who spent almost two weeks adrift before finally reaching shore. The Murmanetz found them on Gusinaya Zemlya peninsula on July 13. 
 The Olopama boatswain gave Dremlyug a small tin cup, which each lifeboat carried for measuring out the daily ration of water. The American gave it to him as a sign of his gratitude and as the most precious reminder of his life-or-death experience. 
 The Murmanetz crew buried the dead sailors near Belushya Bay on Novaya Zemlya, fencing off the spot with chains and anchors. Unfortunately, a Russian Arctic expedition that followed the route of the 1942 rescue operation last year found no sign of the grave. 
 The history of the Arctic allied convoys began in 1941 when Congress passed the Lend-Lease law, which provided for delivery of arms, ammunition, food supplies and other strategic materials to countries fighting the Nazis. 
 From Aug. 31, 1941, to May 22, 1945, the United States and Britain organized 42 convoys to the Soviet ports of Murmansk and Arkhangelsk. The Soviet Union sent back 36 convoys with strategic raw materials. 
 The crews consisted not only of U.S. and British sailors but also seamen from Norway and other countries. The Bri tish navy usually accompanied the convoys until they reached Soviet waters, but even so, the Germans managed to sink an average of five to six ships from every convoy. 
 Along with 24 ships, the unlucky PQ-17 lost 3,350 vehicles, 430 tanks, 210 bombers and about 99,000 tons of general cargo. A total of 153 Allied sailors died. 
 According to Dremlyug, Soviet history made little mention of this example of Allied sailors' courage and downplayed the significance of their efforts. 
 "It was a great help to the Soviet Union - especially during the first two years of the war, when we lost a huge part of our military equipment," he said. 
 In 1942, Dremlyug, a hydrographer-navigator on the Murmanetz, was 24 and one of the youngest members of the crew. The PQ-17 rescue operation occurred during his first Arctic cruise, several months after he graduated from the Leningrad Hydrography Institute. 
 The Murmanetz was especially equipped to research ice and weather conditions in the area of military action in the Barents Sea. It was armed only with two large-caliber machine guns, and the crew had rifles. 
 Dremlyug, a former professor at St. Petersburg's Makarov Navy Institute and author of several books, wrote an article about the tragic events of 1942 for the American magazine Sea Power, which was published last December. 
 The first contact between British veterans and their Russian rescuers was made 15 years ago, but it was only after the publication of Dremlyug's article that American veterans sought him out. 
 "I read your magazine article 'Dog Watches, Destruction and Enamel Cup.' It was most interesting for me because I had sailed on a freighter named Jose Marti delivering goods to Murmansk in 1944. I also made another trip from the U.S. to Arkhangelsk in 1944 on a freighter named Robert Ney Mcneely. I was most fortunate in that neither of the ships were attacked although our convoys lost many ships," wrote Edward Black, a former seaman from South Carolina, by e-mail. 
 The U.S. commendation said the tragedy of the PQ-17 "would have been far greater had it not been for the selfless dedication to duty and untiring efforts of Lieutenant Dremlyug and his shipmates.
 "Their honorable and humanitarian efforts reflect great credit upon themselves and upon the country, and were in keeping with the highest traditions of those who serve at sea."

TITLE: Gusinsky Criticizes Moscow in U.S.
PUBLISHER: Combined Reports
TEXT: Vladimir Gusinsky traveled to Washington last week to urge the West to base its relations with Russia on Moscow's willingness to protect press freedom and human rights. 
 Moscow reacted immediately, blasting Washington for not arresting the media mogul under warrants Russia issued through Interpol.
 Speaking on Thursday at the National Press Club on the occasion of World Press Freedom Day, Gusinsky urged the United States and other Western democracies to establish "red lines" that Russia must not cross if it is to be called a "civilized country." 
 Gusinsky, 48, headed the only privately owned nationwide television station, NTV, which fell victim to a Kremlin crackdown earlier this year. NTV has since come under the control of the state-connected gas monopoly Gazprom. 
 Gusinsky said NTV has lost half of its audience since it changed hands. 
 Speaking through a translator, he said that in Russia, "There is no respect for freedom of the press or private property, no respect for law, independent justice and independent courts. I think that in Russia there is no respect for human rights." 
 At another point, he said, "I think Russia is moving backward, slowly but it is moving. Western leaders should understand the nature of this movement." 
 Russia has charged Gusinsky with fraud and embezzlement but has been unable to prosecute him because he fled to Spain, where a court rejected an extradition request from Moscow last month. 
 In an indirect response to Gusinsky's statements, Moscow lashed out at Washington on Friday for failing to arrest the self-exiled media boss. 
 The Foreign Ministry expressed "serious concern" in a statement that Washington had not arrested Gusinsky under warrants Russia issued through Interpol. 
 "Despite loud statements on the importance of the joint fight against financial crimes ... the American authorities clearly show that in concrete cases they are following political motives first and foremost," the Foreign Ministry said. 
 It said U.S. police were obliged to arrest Gusinsky even though Moscow and Washington share no extradition treaty. 
 Gusinsky says he has been the victim of a Kremlin-backed crackdown aimed at silencing his criticism of President Vladimir Putin. Russia denies any political motive behind its cases against Gusinsky or Gazprom's efforts to gain control of his companies. 
 After NTV came under Gazprom's control, Segodnya newspaper was closed and staff at Itogi magazine were dismissed; both were part-owned by Gusinsky's Media-MOST company, but Gazprom and the head of the Sem Dnei publishing house that printed both publications together had a controlling stake. 
 Gusinsky was arrested last summer and jailed for several days on charges that he had defrauded the state in the privatization of a television studio. That case was dropped, but he later was charged with fraud for misrepresenting NTV's assets when obtaining loans from Gazprom. After the Spanish court refused to extradite Gusinsky to Russia last month to face that charge, prosecutors charged him with laundering $97 million.
 After Gusinsky failed to appear for questioning on these charges Thursday, prosecutors issued a new summons for May 10, said Natalya Veshnyakova, a spokesperson for the Prosecutor's Office.
 <i>- AP, Reuters </i>

TITLE: Russian Youths Pay Tribute to President
PUBLISHER: The Associated Press
TEXT: MOSCOW - In the latest gesture of devotion to the Russian president, thousands of young Russians wearing T-shirts depicting Vladimir Putin gathered outside the Kremlin on Monday to cheer him on the first anniversary of his inauguration. 
 Putin has become a favorite subject for children's books, paintings and films, and some Russians perceive a Soviet-style cult of personality developing around the popular leader. 
 Chanting &quot;Russia! Russia!&quot; and carrying Russian flags, college students from around the country marched to the edge of Red Square, where they listened to patriotic speeches, held hands and swayed to the national anthem. Organizers estimated the turnout at 10,000 people. 
 Sponsored by Walking Together, a pro-presidential youth organization, the rally resembled youth demonstrations of the Soviet era, when people gathered to sing the praises of communist leaders. 
 &quot;Putin has given us hope that we will once again become a mighty country,&quot; 19-year-old Vitalina Svetkova told the cheering crowd. 
 Since Putin took office, public displays of devotion to the now 48-year-old former KGB agent have become increasingly common. 
 Beginning in April, fans of the president could obtain a Putin-inspired e-mail address from the newly opened Web site www.putin.ru. The site also contains news about Putin, chat forums, photographs and Putin-inspired humor. 
 The site's owner, Vladislav Kalinin, said that he created it because people had a lot to say about Putin and needed a forum. 
 &quot;I don't support the personality of the president, but the fact that the people made their choice,&quot; he said. 
 Film director Igor Shadkhan has made a documentary about Putin titled &quot;On the Road&quot; - in Russian, &quot;<i>V Puti</i>,&quot; a play on Putin's name. The film combines interviews Shadkhan did with Putin in 1991 and 1995, when he was deputy mayor of St. Petersburg, and interviews with Russians. 
 &quot;In my family, I guess you could say we love him,&quot; says one woman. 
 Last autumn, the St. Petersburg branch of the pro-government Unity party distributed a biography of Putin in elementary schools strongly reminiscent of children's books about the young Vla di mir Lenin, founder of the Soviet state. 
 In Stary Izborsk, a town 500 kilometers northwest of Moscow famed for its springs, the director of the local museum takes visitors on a tour retracing the steps Putin took when he visited last summer. 
 Some critics warn excessive adulation for the leader could help pave the way for dictatorship. 
 &quot;Such a danger always exists because in Russia the bureaucracy is made up of careerists, whose main objective is to please the bosses,&quot; said Vladimir Pri by lov sky, head of the Panorama political think tank. 
 But Putin's fans say Russia has moved beyond that. 
 &quot;We are even more Western than the West is now. Everyone understands that this is purely opportunistic,&quot; says Oleg Kalmykov, owner of the Moscow art gallery Soyuz Tvorchestva, which displayed Putin portraits this winter. 
 Yury Levada, the director of the VTsIOM polling agency, said that he doubted that the demonstrations of affection for Putin were spontaneous. He said that they were likely part of an organized campaign thought up by Putin's advisers. 
 &quot;According to our data, [only] 3 percent of the population regards Putin's persona with enthusiasm. About 28 or 30 percent are satisfied with it. Everyone else is more reserved,&quot; Levada said. 
 The presidential administration, however, does not take credit for such events, and organizers are denying ties to the Kremlin. 
 Vasily Yakemenko, the leader of Walking Together, said that his group had been financed by &quot;different companies,&quot; although she refused to name them.

TITLE: Unity Party Proposes Car for the People
PUBLISHER: Staff Writer
TEXT: After children's pamphlets and plaster busts, now it's cars. The people's car, in fact.
 The pro-Kremlin Unity party hopes to hand President Vladimir Putin the keys to tens of thousands of Mishkas - a car it is promoting as the vehicle for the ordinary man and woman - in 2003. Mishka is a nickname for bear.
 &quot;We want to begin producing Mish kas in the northwest so the president can give away several tens of thousands on St. Petersburg's 300th anniversary in 2003,&quot; said Viktor Yurakov, deputy head of Unity's St. Petersburg headquarters.
 &quot;In 2003 we will give cars to housewives, students and the other segments of the population that are neglected. We and the president are thinking about them,&quot; Yurakov said. &quot;As for the rich, they can afford to buy their own cars. They can drive their Mercedes.&quot;
 The ambitious - and, some critics say, impossible - plan to build the lightweight, plastic-bodied Mishka as a car for the Russian masses was born at the ASM farm-machinery holding company. Unity's St. Petersburg offices recently caught wind of the project and eagerly jumped on board. 
 The car would sell for $2,000 and sport the Unity party's bear logo on the hood. 
 &quot;The Unity party is a party of practical action and we want to do something concrete,&quot; Yurakov said.
 The practical action as espoused by Yurakov and co. to date has included a pamphlet on children's rights, which created a fuss because of the adoring biography of Putin and his childhood on the first page; and a bust of the president that never got past the plaster stage when Putin asked officials to put a stop to it. The latter scheme was also Yurakov's idea, although members of his own party distanced themselves from an action they saw as overstepping the bounds of hero worship.
 This time, however, Unity's former leader Boris Gryzlov, who is now Interior minister, is backing the Mishka, and has even gone for a spin in one of the prototypes.
 &quot;I drove Mr. Gryzlov around in the car and demonstrated it to him,&quot; said Nikolai Volosov, ASM's general director. 
 Asked if the approval of Russia's top police officer meant a patrol-car model may be in the offing, Volosov said: &quot;Not at the moment, but we will have to investigate the market. If there is demand, then why not?&quot;
 Volosov said Gryzlov was one of the first Unity members to show enthusiasm for the Mishka project and that the two sides were considering financing the project together and drumming up investment from third-party investors.
 He would not say how much investment was needed.
 The concept of a people's car is not new in Russia. Soviet leaders starting from Josef Stalin proclaimed almost all new vehicles to be people's cars, the most well-known example no doubt being the first Lada. Lada is also sold under the name Zhiguli.
 Even after the collapse of the Soviet Union, the pursuit of a people's car remained alive. In the early 1990s, Boris Berezovsky set up the AVVA company as a kind of dealership offering cheap AvtoVAZ-produced cars. Buyers of AVVA bonds were promised dividends and a chance to win lotteries for huge discounts on the cars.
 Then President Boris Yeltsin gave his blessing to the project, handing it lucrative tax breaks and customs exemptions. Current Kremlin Chief of Staff Alexander Voloshin also got involved.
 The lotteries never materialized. AVVA was later made a shareholder in AvtoVAZ.
 Even today, Russian car makers advertise their vehicles as people's cars. A new metal-bodied model of the Izh Oda from the Urals-based Izhevsk plant is being marketed as a people's car.
 The Mishka is to be snapped together in a similar way used with Lego bricks, said ASM's Volosov. It weighs about 700 kilograms and can reach speeds of up to 150 kilometers an hour on a motor built at a Daewoo plant in Zaporozhets, Ukraine. Volosov said the first prototype was displayed at a Moscow auto salon in 1999, and four others were demonstrated last year. He plans to build up to 40 more experimental models in 2001.
 Large-scale production is to begin next year, with assembly in several regions, including St. Petersburg.
 Critics said the big plans for the small car may never bear fruit.
 &quot;Russia already has a people's car,&quot; said Alexander Pikulenko, automobile correspondent for Ekho Moskvy radio. &quot;It is the classic, rear-wheel drive Lada, which is relatively cheap but has enough power to navigate roads all across the country. Just imagine Mishka on the plains of western Siberia or on muddy dirt roads in Volga region.&quot;
 Mikhail Rogalsky, founder of the popular Auto.ru Internet site, said he was skeptical about the car's safety, questioning the strength of a plastic body in a crash and the quality of Russian workmanship. &quot;I am really puzzled. To make it safe they would have to dedicate a special lane for those cars on the streets,&quot; he said. &quot;Otherwise there will just be twice as many deaths on the road.&quot;
 About 30,000 people died in road accidents last year.
 Even the traffic police expressed doubts about Mishka's future.
 &quot;Both cars that currently take Mishka's niche on Russian roads - Oka and the Ukrainian-made Tavria - are utterly unfit to comply with modern vehicle safety regulations,&quot; said Sergei Borodin, spokesperson for the Moscow traffic police. &quot;And for Mishka, from what has been presented so far, matching European standards will also be hard.&quot;
 But such doubts are not damping the spirits of Mishka's backers.
 ASM's Volosov said plans are being drawn up for other versions of Mishka, including sports, electric and four-wheel-drive models.
 &quot;And they won't just have the name Mishka, but others like Grishka, Petka, Masha,&quot; Volosov said, mentioning the diminutives for the names Grigory, Pyotr and Maria. 
 He did not mention Vovka, the diminutive for Putin's first name, Vladimir.

TITLE: Ivanov To Discuss Trade With Libya
PUBLISHER: Reuters
TEXT: TUNIS - Foreign Minister Igor Ivanov arrived in Tripoli Sunday for a visit during which he is expected to meet Libyan leader Muammar Gaddafi and hold talks aimed at boosting trade and military ties.
 Libyan state television showed Libyan Foreign Minister Mohamed Abderrahmane Chalgam greeting Ivanov.
 Earlier Russia's Interfax news agency said Ivanov would hand Gaddafi a message from President Vladimir Putin and discuss plans for a possible visit to Moscow by the Libyan leader.
 Ivanov's visit forms part of Russian moves to shore up relations with former Soviet allies, including countries dubbed &quot;rogue states&quot; by the United States.
 Putin has visited North Korea and Pyongyang's leader Kim Jong-il is expected to visit Moscow later this year. Russian officials have also visited Iran and Iraq.
 &quot;[Ivanov's visit] reflects the program of diversifying Russia's foreign policy contacts, in which it is purposefully activating its foreign policy in the Middle East and Africa,&quot; Interfax quoted Deputy Foreign Minister Vasily Sredin as saying.

TITLE: Concentrate on Loose Nukes, Bush Advised
PUBLISHER: Combined Reports
TEXT: While President Bush is proposing to spend tens of billions of dollars to defend the United States from nuclear-tipped ballistic missiles, critics contend he is overlooking a more immediate threat that could be eased less expensively.
 The most probable vehicle for a U.S.-targeted nuclear bomb, defense analysts say, is not the one Bush has focused on: an expensive intercontinental missile shot off by North Korea, Iran or some other mercurial Third World country.
 Instead, people wishing to kill Americans with a nuclear explosion are far more likely to steal or buy a bomb from Russia and smuggle it into the United States by truck or ship, analysts say.
 But so far Bush has taken no action on an urgent recommendation by a bipartisan task force to quadruple spending on controlling &quot;loose nukes&quot; in Russia.
 In fact, amid a feeling in the administration and on Capitol Hill that Moscow receives too much U.S. aid already, Bush's 2002 budget cuts nuclear-control assistance for Russia and other states of the former Soviet Union by more than 10 percent, to about $750 million.
 That raises the already substantial risk that Russian nuclear warheads, which exist by the thousands in disorganized warehouses, secured by poorly paid guards, will slip into the wrong hands, critics say.
 &quot;We were not spending enough to begin with&quot; on controlling nuclear materials in former Soviet states, said Representative Ellen Tauscher of California, the ranking Democrat on a congressional panel overseeing the program.
 Bush, in a speech Tuesday, pledged to develop and deploy a multilayered defensive system to shoot down missiles headed toward the United States, its allies and friends. He put no price tag on the project, but the Clinton administration's far less ambitious missile defense plan was projected to cost $60 billion.
 In January, a task force headed by former Clinton White House counsel Lloyd Cutler and former Republican senator Howard Baker Jr. called loose Russian nuclear weapons &quot;the most urgent unmet national security threat.&quot; The panel recommended boosting annual U.S. spending on the problem to $3 billion, a fourfold increase.
 Baker, Bush's nominee to be ambassador to Japan, said he's amazed that the problem hasn't prompted more concern.
 &quot;It really boggles my mind that there could be 40,000 nuclear weapons in the former Soviet Union, poorly controlled and poorly stored, and that the world isn't in a near state of hysteria about the danger,&quot; Baker told the Senate Foreign Relations Committee a month ago. 
 &quot;We will have a whole different problem on our hands if the terrorism threat ... finds the means to express itself through weapons of mass destruction,&quot; said Charles B. Curtis, former deputy secretary of energy and now president of the Nuclear Threat Initiative, a nonprofit group financed by media mogul Ted Turner.
 The White House is doing a comprehensive review of U.S. nonproliferation programs, expected to be finished by July. Curtis and others hope the review will lead to an increase in administration support and funding for the various control measures.
 Administration officials denied that Bush has given short shrift to the United States' Russian nonproliferation programs. John Gordon, Energy Department undersecretary for nuclear security, told Congress last month that the administration's review will look at &quot;the quality of those programs and then see how that fits into their Russian and nonproliferation programs.&quot;
 In general, U.S. aid programs to Russia face increasing American criticism for inefficiency and vulnerability to corruption, and Russians complain that much of the money ended up in U.S. contractors' pockets. 
 In the arms-reduction field, the Russian security service may feel the U.S. monitors are getting too intrusive. 
 The program gives the monitors &quot;unique access,&quot; said Alexander Pika yev, an arms-control expert at the Moscow office of the Carnegie Endowment. &quot;If political relations deteriorate, Russia will be less interested in transparency.&quot; 
 Gennady Khromov, a Russian negotiator, said the Americans demanded only plutonium from weapons be stored at Mayak. &quot;But to prove that, we're being asked to strip naked and show everything we have,&quot; he said. 
 Reid rejected the criticism, saying there were demonstrated ways of providing those guarantees without revealing Russian secrets. 
 The National Security Council is supposed to wind up its review of the program in mid-May, according to Reid. 
 Nobody has documented a case of Russian warheads or weapons-grade materials being acquired by U.S. enemies. But by many accounts it hasn't been for lack of trying by criminal elements in Russia.
 Law-enforcement authorities in various countries have seized more than a dozen shipments of illegal, weapons-grade uranium or plutonium in the last decade, according to Rennsselaer Lee, author of &quot;Smuggling Armageddon: The Nuclear Black Market.&quot;
 In at least two cases, Russian government officials offered to sell plutonium to visiting foreign scientists, says Lee, a senior fellow at the Foreign Policy Research Institute.
 In another instance, documented by the Baker-Cutler panel, Russian sailors in Murmansk were caught recently with stolen uranium submarine fuel.
 
 <i>- The Baltimore Sun, AP </i>

TITLE: Putin Calls for Talks on Global Security
PUBLISHER: Combined Reports
TEXT: President Vladimir Putin, striking an unusually upbeat note, said Friday that a controversial decision by U.S. President George W. Bush to build a shield against ballistic missile attacks was a good basis for talks on international security.
 Russia has long been a fierce opponent of the U.S. plan, which took a first step toward becoming reality last week when Bush committed the United States to build the shield.
 Bush, making his first major defense address, warned last Tuesday that hostile nations like Iraq have replaced the Soviet Union as the &quot;most urgent threat&quot; to the United States and its allies.
 Offering a &quot;clear and clean break from the past,&quot; he denounced a 29-year-old arms control treaty with Russia as a Cold War relic but softened his remarks by pledging to reduce U.S. nuclear arsenals.
 The president said that he would like to meet soon with Putin to &quot;look him in the eye&quot; and persuade him that a U.S. missile defense system does not threaten Moscow.
 He also offered a &quot;new framework&quot; for U.S.-Russian relations that could include sharing information, warning Moscow of incoming attacks, and even a joint defense with America's former nemesis.
 Bush spoke by telephone with Putin before outlining his plans at the National Defense University, and the pair made plans to meet as early as next month in Europe.
 Putin, speaking to reporters Friday after talks with Uzbek President Islam Karimov in the Kremlin, noted Bush has promised to consult with Russia about the shield and made clear the United States does not consider Russia an enemy.
 &quot;In my opinion this creates a good basis for a positive dialogue,&quot; Putin said. &quot;We will see in the future what the result of the dialogue will be.&quot;
 &quot;I cannot but agree with President Bush that the world is changing very fast and new threats can emerge,&quot; Putin said. &quot;I also agree that we must think about it and agree that we should meet this with well thought-out actions.&quot;
 But he said any efforts to improve international security should be guided by two principles.
 &quot;First, one should not destroy the existing international security system, and secondly we should act together,&quot; he said.
 This was a reference to the 1972 Anti-Ballistic Missile Treaty and to Bush's promise to make unilateral nuclear weapons cuts. Russia has repeatedly said that ducking limitations imposed by the ABM pact would destroy the nuclear balance, fueling a new arms race and threatening its national security.
 Putin himself has proposed nuclear cuts to 1,500 warheads or lower, but through a verifiable arms accord rather than unilateral reductions. The United States has 7,295 deployed warheads compared with Russia's 6,094.
 Russia has proposed an as-yet vague plan for a European anti-missile defense. NATO is studying the proposal.
 A U.S. delegation is expected to visit Moscow this week to discuss the anti-missile defense plan. Interfax said the team would arrive Thursday and stay two days.
 The plan is getting a mixed reception in Europe and even in Washington, where opponents question the wisdom of a decision to shield the United States with a wide range of unproven and costly systems designed to disable incoming missiles.
 &quot;There has not been a shred of evidence that this works. We've got to ask some very tough questions,&quot; Senate minority leader Tom Daschle said last week. &quot;We fear the president may be buying a lemon here.&quot;
 UN Secretary General Kofi Annan said Bush's plans &quot;inevitably have an impact upon global security and strategic stability.&quot; 
 <i>- Reuters, AP </i>

TITLE: Tobin Claims FSB Tried To Recruit Him
PUBLISHER: The Associated Press
TEXT: RIDGEFIELD, Connecticut - In a letter that he sent home from a Russian prison, U.S. Fulbright scholar John Tobin claimed that his trial on drug charges came only after Russian authorities tried to recruit him as a spy. 
 &quot;So what happened?&quot; Tobin, 24, wrote in a letter to his family and girlfriend explaining his arrest for marijuana possession and distribution. &quot;Well, the local authorities constructed a nice little setup that I fell for like an idiot, hook, line and sinker. So what now? I've rejected their offers to work for the local man. So I might have to sit here for a while.&quot; 
 On Friday, Tobin's father showed portions of the letter to a reporter from The News-Times of Danbury, Connecticut. He said that the letter was forwarded by the U.S. Embassy in Moscow. 
 He has had the letter since March, he said, and is sharing it now because of his shock over his son's April 27 conviction on drug charges. 
 Police said Tobin had a small matchbox containing marijuana on him when he was arrested Jan. 26 at a local nightclub. He was convicted of obtaining, possessing and distributing the drug and was sentenced to 37 months in prison. 
 On Friday, his Russian lawyer filed an appeal. 
 Tobin's father said he has been told by the U.S. State Department that Secretary of State Colin Powell will discuss the situation when he meets with the Russian foreign minister May 14. 
 &quot;So much of this has been absurd,&quot; said the father, also named John Tobin. &quot;I keep thinking my government can do more - my government has not yet stepped up to the plate.&quot; 
 He said he believes the Russians tried to recruit his son because he had some military intelligence training, spoke fluent Russian, attended the Defense Language Institute and was a member of the 325th Army Reserve military intelligence unit based in Waterbury. 
 &quot;They grabbed him at the end of January because they were trying to get him to play ball: You are going to work for us, or you are going to sit in jail,&quot; he said. 
 His son, a Middlebury College graduate, was on a Fulbright scholarship at Voronezh State University, 480 kilometers south of Moscow, studying Russia's transition to democracy.

TITLE: IN BRIEF
TEXT: Chemical Committee
 

MOSCOW (AP) - President Vla di mir Putin on Friday set up a new committee to accelerate the destruction of Russia's chemical-weapons stockpile, and the head of the agency in charge of eliminating the arsenal said the first large batch would be destroyed by next spring.
 Russia was one of the first countries to sign the Chemical Weapons Convention, which commits countries to get rid of their arsenals of nerve gases and compounds that are used in weapons of mass destruction by 2012. Moscow ratified the international convention in 1997, but has yet to begin destroying its 44,000 tons of highly toxic blister agents and nerve toxins - the world's largest chemical-weapons arsenal. 
 Under the convention, Russia was supposed to destroy the first 440 tons of chemical weapons by the end of April 2000. However, the government last year pleaded for more time, citing lack of funds. 
 Zinovy Pak, the head of the Russian Munitions Agency, said Friday that the first 8,800-ton batch of weapons would be destroyed by April 29, 2002, Itar-Tass reported. 
 Even the most optimistic Russian experts predict that it will take Russia at least 15 years to eliminate its entire stockpile - once it gets the program under way.
 
 
Orthodox Heads Meet
 

MOSCOW (AP) - Following the dramatic visit of Pope John Paul II to heavily Orthodox Greece, the head of the Greek church came to Moscow on Saturday for meetings with Russian Orthodox Patriarch Alexy II.
 Relations with the Vatican are sure to be high on the list. The Russian church has firmly resisted the pope's desire to visit Russia and is angered by John Paul's plans to visit neighboring Ukraine in June. It wants the visit postponed until after the two churches settle what Moscow bishops say are disputes over church properties in Ukraine, and over alleged Roman Catholic efforts to convert people in Orthodox countries. 
 On Friday, the pope reached out to the Orthodox world in a bold gesture during his visit to Greece, issuing a sweeping apology for "sins of action and omission" by Roman Catholics, including the sacking of Constantinople, the center of Orthodoxy, in 1204. 
 Some observers had hoped that the pope's trip to Greece and the broad apology might ease the obstacles to a papal visit to Russia. But Alexy on Saturday gave a reserved assessment of the apology. 
 "This statement has to be seen in context, but as far as I am aware it is primarily about the Crusades. It's necessary to see how this apology will be manifested in actions," he said. 
 
 
Ukraine Miners Killed
 

KIEV, Ukraine (AP) - A methane gas explosion killed eight workers in a mine in eastern Ukraine, the deadliest accident to strike the country's ramshackle coal industry this year, officials said on Sunday. Two people were missing. 
 The blast occurred on Saturday evening at the Kirov mine in the coal-rich Donetsk region, the Emergency Situations Ministry said.
 Of the 151 miners working underground at the time, 141 were brought safely to the surface. 
 About 90 coal workers have died in accidents this year, down from more than 160 over the same period in 2000. 



TITLE: Chechen Administration To Move Out of Grozny
PUBLISHER: Combined Reports
TEXT: Less than two weeks after the Kremlin-backed civilian administration in Chech nya moved to Grozny, officials announced it will move out temporarily because of security concerns.
 &quot;Conditions for the government's safe work in Grozny have not yet been created,&quot; Nikolai Patrushev, director of the Federal Security Service, or FSB, said Saturday, according to Interfax.
 Patrushev, whose agency directs the campaign to retake control of the republic from rebels, made the statement after a meeting of security chiefs who were touring the troubled North Caucasus.
 The Kremlin-backed administration will return to Gudermes, Chechnya's second-largest city, where it had been based until opening a headquarters in Grozny on April 23. 
 On April 25, the same day authorities announced the administration's return to Grozny, a suspected rebel bomb blast killed six police officers.
 Aides to Grozny Mayor Bislan Gantamirov said Saturday he had ordered anyone found guilty of killing Russian civilians in the city to be shot on the spot. It was not immediately clear if his order had been sanctioned by the military.
 Federal troops control most of Chech nya, but officials concede rebels are free to roam at night, allowing them to evade capture and prepare attacks. It was hoped that stepped-up night patrols by the army would put a stop to that, said Interior Minister Boris Gryz lov, who was accompanying Patrushev with Defense Minister Sergei Ivanov.
 Despite an official announcement of the end of the military phase of Mos cow's anti-terrorist operation in April 2000, federal troops have failed to crush rebel resistance and suffer fatalities on an almost daily basis.
 In January, a frustrated President Vla dimir Putin put Patrushev in charge of hunting down rebel field commanders and ordered him to produce results by mid-May. So far, none of the leading commanders have been seized.
 Putin told ministers in January to prepare an economic recovery plan for Chechnya and mooted a gradual withdrawal of almost three quarters of Moscow's 80,000 troops there.
 But Ivanov reiterated Saturday that, after the withdrawal of more than 5,000 troops and much armor, further reductions had been put on hold.
 Gryzlov said it was vital to boost the Chechen presence in the region's police force, to help build confidence and numbers.
 On Saturday, the trio of security ministers said Russian lawmakers had to get tougher on political extremism if the government wanted to crush separatists.
 &quot;It is essential that the government ... work out a strategic set of laws, which must be passed quickly, on political extremism, on emergency situations, on immigration and citizenship,&quot; Gryzlov said in televised comments.
 Patrushev backed Gryzlov's call, made after the ministers had talks in Yessentuki in the southern Stavropol territory, which borders Chechnya.
 In Chechnya, officials on Saturday reported the killing of a prominent religious leader. Mullah Nasruddin Matuyev was on his way home Friday in the village of Noviye Atagi when two unidentified gunmen fatally shot him, the Chechen prosecutor's office told Interfax.
 Matuyev, 76, was one of Chechnya's most senior religious leaders and was engaged in peacemaking activities when he was killed, the prosecutors said. 
 <i>
 - Reuters, AP </i>

TITLE: Extra Shares Give Gazprom Controlling Stake in NTV
PUBLISHER: The Associated Press
TEXT: MOSCOW - A Moscow court has handed state-controlled Gazprom additional shares in Vladimir Gusinsky's crumbling media empire, giving it a controlling stake in NTV television. 
 The decision issued Friday by the Cheryomushkinsky municipal court cast into doubt the future of Ekho Moskvy, a radio station with a mostly news format, which is owned by Gusinsky's Media-MOST holding company. 
 Last month, Gazprom, which previously owned a 46 percent stake in NTV, teamed up with another minority shareholder to change the management at the station, the only nonstate nationwide channel. 
 Friday's decision gave Gazprom another 19 percent stake in NTV and 25 percent plus one share of all the companies owned by Media-MOST, said Aelita Yefimova, spokeswoman for the gas company's media subsidiary Gazprom-Media. 
 Those shares had been put up as collateral by Media-MOST on a loan that Gazprom guaranteed, which comes due in July. Yefimova said the court awarded Gazprom the shares because Media-MOST went back on an agreement signed between the two companies in November. 
 Under that agreement, Gazprom was to sell those shares through Deutsche Bank to foreign investors. Media-MOST refused to turn over the shares, saying Gazprom had violated the agreement by making a deal with Deutsche Bank that abolished a separate agreement that would allow Media-MOST to vote the shares until they were sold. 
 There was no immediate information on whether Gazprom would again try to sell the 19 percent stake to foreign investors. 
 Media-MOST spokesman Dmitry Ostalsky harshly criticized the decision. 
 &quot;We are analyzing the situation to see if it makes sense to try to fight this&quot; by appealing to a higher court, he said. 
 Ostalsky said the decision represented the biggest threat to Ekho Moskvy's editorial independence.

TITLE: $1 Billion Railways Plan Aims at Telecoms
PUBLISHER: Staff Writer
TEXT: MOSCOW - The Railways Ministry is aggressively moving to become a national telephone operator with plans to sink hundreds of millions of dollars this year into its existing telecoms network, a ministry official said. 
 The ministry also intends to speed up its operations by automating its services this year, said Vladimir Voronin, head of the Railways Ministry's communications and information department. 
 The price tag for the upgrades: about $1 billion. That sum accounts for almost a fourth of the 110 billion rubles the ministry wants to spend this year on railroad development.
 Every third or fourth ruble that is earned by the railroad will go toward technical upgrades, with a significant portion of those rubles earmarked for completing the construction of Transtelecom, the ministry's long-distance operator that it created in 1997, Voronin said.
 Voronin could not say how much of the $1 billion to be spent this year would go toward telecommunications and automation.
 He said that in the past three years, the Railways Ministry has invested $800 million constructing a telecommunications network - mainly Transtelecom - and it intends to invest a similar amount into telecoms over the next three years. 
 First Deputy Railways Minister Alexander Tselko said last week that introducing the new automated system would slash 500,000 jobs from the railroad from 2001 to 2005, Interfax reported.
 Transtelecom could be a national operator by the end of 2002, Voronin said.
 The telecom operator is 49 percent owned by the Railways Ministry and 51 percent owned by 17 Russian railroads, which in turn are fully owned by the ministry.
 The Railways Ministry has said that it intends to sell off 49 percent, while keeping a controlling stake for itself.
 If fulfilled, the ambitious plan could spell trouble for Rostelecom, the 51 percent Svyazinvest-owned telecoms giant with nearly exclusive rights to service the long-distance needs of the country's 70-plus regional operators. Those operators are majority owned by state telecoms holding Svyazinvest. 
 Analysts say that Transtelecom would be a viable national operator only if it is able to snap up the business of regional operators. Officials at Svyazinvest and the Communications Ministry have said they will keep Rostelecom a monopoly for only the next few years.
 &quot;Russia, like every country, must go through a period of demonopolization for domestic and international long-distance services,&quot; Communications Minister Leonid Reiman said, Vedomosti reported Monday. 
 He added that for now only Rostelecom has the capacity to serve as a national operator.
 Konstantin Chernyshev, NIKoil's head of research, estimated that Transtelecom could get 10 percent to 15 percent of the country's international and domestic long-distance traffic as the market is liberalized. He said Transtelecom should invest this year in building switching stations in the regions to allow providers to switch from Rostelecom.
 &quot;From a customer's point of view we need some competition on this market. Otherwise, Rostelecom's monopoly can be an obstacle for the future development of telecoms,&quot; Chernyshev said.
 Transtelecom has constructed more than 35,000 kilometers of lines so far at a cost of about $18,000 a kilometer, Voronin said. More than half the lines are in use. 
 By comparison, Rostelecom has more than 200,000 kilometers of digital and analog lines. 
 First Deputy Communications Minister Yury Pavlenko said in April that Rostelecom carries 70 percent of international traffic and 90 percent of domestic traffic.
 But long-distance services aren't the only area where Transtelecom might compete. Europe-Asia transit traffic and data traffic for Internet services are the talk of the town among other emerging telecoms providers such as gas monopoly Gazprom's Gaztelecom and power giant Unified Energy Systems' MUSE. Rostelecom has no monopoly in Internet services, although last month it laid out vague plans to create a national Internet service provider.
 Analysts believe that Transtelecom has a good oppoertunity to be successful nationwide. Like UES, it has the advantage of a wide-reaching existing electricity grid on which it can lay fiber-optic lines. Also, the Railways Ministry doesn't have to dig up ground to lay down cables.
 The ministry initially decided to delve into telecoms to solve its own communications problems. But the capacity of its own network grew to be far more than it needed, and the ministry decided to use Transtelecom for commercial purposes. 
 Other development plans set for 2001 include the electrification of railway tracks (18.85 billion rubles - $653 million) and other so-called priority construction and upgrade projects such as building St. Petersburg's rail infrastructure and updating existing lines between St. Petersburg and Moscow (6.84 billion rubles - $237 million) and the purchase of new train cars (9.72 billion rubles - $337 million), Vedomosti reported.

TITLE: Ministry Unfazed by Drop in Tax Filings
PUBLISHER: Staff Writer
TEXT: MOSCOW - The deadline for filing individual income- tax declarations has passed. And fewer people filed than in the past two years.
 But the Tax Ministry is unworried. Backed by a Kremlin drive to increase tax take through a new flat 13 percent income tax, the ministry said Monday that next year would be much better.
 The Tax Ministry said Monday that 2.4 million people filed their 2000 income-tax declarations by the May 3 deadline, sharply down from the 3.3 million filers last year and 4 million in 1999. Russia has 70 million working citizens.
 The ministry said it would disclose the amount of income tax collected at the end of May.
 Deputy Tax Minister Salavat Aminev said the drop in tax declarations was linked largely to an increase in year-end filers. Some 1.25 million people filed separate tax statements based on imputed income and did not have to file personal income taxes in May.
 Sergei Parkhomenko of the Association of Taxpayers advocacy group said other factors were to blame for the decrease, mainly the government's decision last year to raise the lowest amount of income that people have to declare from 30,000 rubles to 50,000 rubles.
 Also, unlike years past when the tax authorities ran advertising campaigns warning Russians that they faced jail time and even impotence if they didn't pay, this time around the ads were low key, he said.
 &quot;When there is no pressure, many people decide not to fill out the declarations,&quot; said Parkhomenko. &quot;The problem is that the procedure still takes so much time, and energy.&quot;
 Most Russians get their income taxes automatically paid for them each month by their employers, as required by law.
 But any additional income that would take that amount over the 50,000 ruble mark must be declared separately.
 To supplement their incomes, many Russians hold second and even third unofficial jobs, such as selling goods on the streets or working as gypsy taxi drivers. This income has created a thriving gray economy that the Tax Ministry desperately wants to tap. 
 In a bid to bring such earnings out of the shadows, the government last year announced the 13 percent flat income tax, which took affect Jan. 1, 2001.
 Filers on May 3 had to pay under the former tax regime, which slapped a top tax bracket of 35 percent on earnings over 100,000 rubles ($3,400).
 The new tax regime is seen by some as the single most important piece of economic reform that has been introduced to date under President Vladimir Putin.
 In February, Putin reiterated the priority of tax collection reform at a meeting with top tax officials, and last month he promised that the 13 percent rate would &quot;remain in place for years.&quot;
 The aim, Putin said, is to set taxes so low and the penalties for evasion so high that compliance becomes rational.

TITLE: OECD Forecasts Rebound for Economic Indicators in 2002
PUBLISHER: Reuters
TEXT: MOSCOW - Russia's gross domestic product growth is set to ease this year from last year's fast pace and then rebound again in 2002, said the Organization for Economic Cooperation and Development.
 But the organization warned late last week that an overall economic slowdown worldwide could undercut Russia's growth.
 The rate of inflation is expected to remain roughly stable this year at 20 percent after last year's level of 20.2 percent, but will slow down to 15 percent in 2002.
 &quot;Economic growth should continue in Russia this year and next, although at a more modest pace in the face of a stronger ruble, relatively higher input prices for manufacturing firms, slower expansion in demand, and the rising capacity constraints in some industries,&quot; the OECD said in its Economic Outlook.
 In 2000, the rate of Russian economic growth was the highest registered in post-Soviet times - GDP rose by about 8 percent. The rise was bolstered primarily by a weaker ruble, stronger consumer demand and high prices for key exports of energy and metals.
 GDP growth for the year 2001 is expected to ease to 3.0 percent, but then rebound to 4.0 percent in 2002. But the OECD said that a general slowdown of OECD economies could serve to dampen Russian exports.
 &quot;A slowdown in growth in OECD countries could also have a negative impact on demand and prices for Russian exports,&quot; the OECD said.
 But it also said that Russia's account balance would remain strong, at $30 billion in 2002, although that figure will be down from $40 billion in 2001. Russia's account surplus was $46 billion in 2000. The OECD also said the government's 2001 annual CPI forecast of 12 percent to 15 percent may be difficult to achieve.
 &quot;While there does not appear to be any immediate threat to financial stability in Russia, the rate of inflation in 2001 will depend on the future conduct of monetary and exchange rate policy, &quot; it said.
 The OECD said that medium- and longer-term prospects for the Russian economy would depend on further progress in structural reforms, particularly in the improvement of the investment environment and competition.

TITLE: Antonov Finally Gets off the Ground
PUBLISHER: Reuters
TEXT: HOSTOMEL AERODROME, Ukraine - The world's largest plane took to the air in Ukraine on Monday, successfully completing a short test flight and fuelling hopes for a recovery in the country's struggling aviation and airfreight industries.
 The giant Antonov-225, a heavily reworked version of a plane originally designed to carry the former Soviet Union's Buran space shuttle, took off from Hostomel airport outside Kiev and flew for 15 minutes before landing safely.
 &quot;Big machine, big emotion,&quot; jubilant test flight engineer Alexei Shu le schenko said as the crew was cheered and hugged by colleagues from the Antonov aircraft-designing company. 
 &quot;The test was a success. Everything is fine,&quot; Petro Balabuyev, head of the Antonov company, told reporters.
 Antonov has extensive experience in the heavy cargo market. Its An-124-100, a 120-ton capacity freighter known as the Ruslan, is the largest plane currently in commercial use.
 The An-124 is aimed at the niche market for superheavy and oversized air cargo, which is worth more than $200 million a year and is dominated by Russian and Ukrainian carriers.
 But industry experts say the An-225, dubbed <i>Mriya</i>, or Dream, which can carry 250 tons of cargo, could increase the size of that market.
 The An-225's wingspan is a staggering 88.4 meters. The cargo bay is 43 meters long, 6.4 meters wide and 4.4 meters deep and could house 80 cars or 16 universal freight containers.
 Balabuyev, who said the plane was expected to receive its commercial certification within a month, said the company had already been contacted by potential clients. Business flights could take place within one and a half months.
 Russia's Volga-Dnepr Airlines, which controls the lion's share of the superheavy air cargo market, has said it is interested in cooperating with Antonov to put the An-225 into commercial use.
 The plane, which may appear in June at the world's largest aviation industry airshow at Le Bourget, France, was launched in 1988 as part of the former Soviet Union's space program.
 Just two such planes were built, and only one actually flew. Balabuyev said he would like to sell the incomplete aircraft, which would command a $60 million price tag.
 Since 1988 the design has been extensively modified, with more powerful engines and a strengthened fuselage, among other changes. The test flight had been delayed from April 19.
 According to revised Antonov figures, the plane can carry 200 tons for up to 4,000 kilometers at its cruising speed of 750 to 850 kilometers per hour. With a lower payload of 150 tons, the range extends to 7,000 km. Range tests with the maximum cargo of 250 tonnes have not been carried out yet, Antonov said.
 Cargo can be carried inside and outside the aeroplane.

TITLE: UES Threatening KrAZ Cutoff
PUBLISHER: Reuters
TEXT: MOSCOW - National power utility Unified Energy Systems said Friday it would fully cut off Krasnoyarsk Aluminum Plant's power supplies Thursday if an agreement was not reached in a dispute over payments.
 Earlier in the day, Krasnoyarskenergo, which is owned by UES, had cut electricity supplies to KrAZ for about five hours leading to losses of around $1 million, the plant said.
 &quot;At the moment, a solution to the problem has not been reached. If nothing is decided by May 10, then the electricity supply will be fully switched off,&quot; Arkady Trachuk, UES's sales department head, told a news conference.
 He added that discussions would continue Monday.
 KrAZ is the country's second- biggest aluminum producer, and is owned by the Russian Aluminum group, which controls more than 70 percent of Russia's aluminum output. KrAZ has no alternative power supply.
 A KrAZ spokesman said UES's threat contradicted court decisions taken since the legal dispute began two years ago.
 &quot;They're going against the law in these statements but our lawyers will go back to the courts and if any decision is made for us to pay we'll pay,&quot; he said.
 UES, which holds controlling stakes in almost every Russian electricity utility, says KrAZ owes it 814 million rubles ($28.11 million) in arrears, but Krasnoyarsk rejects this.
 Russian Aluminum said it could cover any production loss from KrAZ.
 &quot;We're a big company and could absorb KrAZ losses from, say, the Bratsk smelter,&quot; said the group's deputy general director Yevgeny Ivanov, referring to the country's No. 1 aluminum plant.
 A source in KrAZ's press service said 100 to 150 metric tons of primary aluminum production valued at about $1 million had been lost.
 &quot;Supplies were restarted after about five hours. If they had been cut for over six hours, up to 30 percent of production capacity could have been lost,'' he said.
 KrAZ had said in a statement that if the liquefied metal in electrolytic pots at the smelter solidified it would be impossible to resume production and capacity would be cut.
 KrAZ, which is Russia's biggest aluminum smelter, produced 838,377 tons of primary aluminum in 2000, up 0.2 percent from the previous year.
 Last October KrAZ said it would take legal action against Krasnoyarskenergo if it acted on threats to cut supplies.
 In December 1999, a top court delayed indefinitely the implementation of a local court ruling that required KrAZ to pay $121 million to Krasnoyarskenergo.
 Krasnoyarskenergo said the plant had paid it too little for electricity supplies between 1995 and 1998 and demanded that it pay the shortfall.

TITLE: Realtors Balking at Drop Of License Requirements
PUBLISHER: Staff Writer
TEXT: In the near future, real-estate firms may no longer be required to hold government-issued licenses to operate in the Russian market, and the St. Petersburg Association of Real Estate Professionals is not pleased with the prospect.
 In April, the Ministry of Economy Development, headed by German Gref, submitted for State Duma hearings a draft law listing those economic activities for which firms must be licensed. The legislation is intended to replace the existing set of rules, which was passed in 1997, and reduces the number of activities requiring licensing from 300 to 90.
 The ministry's rationale behind the smaller list was to reduce the amount of bureaucratic red tape faced by small businesses and to streamline the process of opening new businesses in general.
 But realtors in the city say that the list has gone too far and have sent open letters to Gref and State Duma chairperson Gennady Seleznyov requesting that the draft be revised to maintain the licensing requirement for real-estate firms.
 Neither Gref nor Seleznyov have replied to the letters.
 According to Alexander Sharapov, first vice-president of the association, its members are calling for the licensing requirement to be maintained in order to deter unscrupulous practices in the market.
 &quot;If the licenses are abandoned, it will mean a return to the Wild-West character the market had in the early 90s,&quot; Sharapov said at a press conference held at the end of April. &quot;Today the volume of business which goes on in the 'gray' sector of the real-estate market is estimated to be about 40 percent.&quot;
 &quot;The lack of licensing will bring unprofessional and, frankly, criminal players.&quot;
 Some State Duma representatives have already expressed agreement with the association's position.
 &quot;The revocation of the licensing requirements threatens to expose customers of real-estate firms to significant and unreasonable risks without really bringing about a drop in the cost of the services themselves,&quot; Pyotr Shelishch, a State Duma deputy and the deputy head of the Customers Community of Russia, said in a letter to the real-estate association. 
 &quot;The old version probably needs some new spheres of activity added as there are some lacking,&quot; Ivan Grachev, a State Duma deputy and the chairman of the Mortgage Development Commission, said in telephone interview Monday. &quot;The move to further develop legal norms is on the right track, but we can already see new difficulties arising. The opinion of the real estate firms is important, as they are the ones actually operating in the market.&quot;
 However, according to Boris Mo shen sky, an analyst with the St. Petersburg office of Colliers HIB, an international property consultant company, the elimination of the licensing requirement won't change conditions in the market.
 &quot;I worked at both Russian and International real estate agencies, and right from the beginning of licensing in 1997 I was against it,&quot; Moshensky said. &quot;I see no difference between the current system of licensing and operating without them.&quot; 
 &quot;All real estate agents in a company applying for a license have been required to pass an exam to prove their professional competence before a license was issued,&quot; Moshensky said. &quot;But there's a great deal of employee turnover in real estate companies.&quot;
 &quot;It's entirely possible for a company to get a license and then hire half of its new staff right off the street. The licensing doesn't satisfy its main purpose - to protect people from fraud.&quot;
 Despite Moshensky's stance, the association of realtors maintains that the move will be a step backward.&quot;
 &quot;In the early 90s, there was no system to appraise the value of apartments being sold,&quot; Yekaterina Bogolubova, press secretary for the association, said. &quot;People sometimes ended up being able to sell apartments right away for twice what they paid for them.
 &quot;By the mid-90s, the situation had been become more stable than at first as a result of steps taken by the agencies themselves,&quot; she added. &quot;But the move by the government in 1997 to require licensing helped move this process of developing the market further along.&quot;

TITLE: Pipeline for Russian Gas Drawing Scrutiny
PUBLISHER: The Associated Press
TEXT: ANKARA, Turkey - Prosecutors are investigating allegations of corruption in a multibillion-dollar project to construct a pipeline under the Black Sea to bring Russian gas to Turkey, officials said.
 The probe is the latest step in a widening investigation into alleged graft in state energy deals.
 Energy Minister Cumhur Ersumer resigned in late April after prosecutors filed bribery charges against 15 energy officials and businessmen and implicated him in the scandal.
 An energy official, speaking on condition of anonymity, said late last week that a corruption probe into the pipeline project was under way, but gave no details.
 Radikal newspaper said Ankara State Security Court prosecutor Nuh Mete Yuksel began investigating possible irregularities in a $50 million advance payment made to a Russian-Turkish consortium building the Turkish stretch of the pipeline.
 He was also looking into rumors that the consortium - led by Russian pipeline-construction company Stroitransgaz and Turkish companies Oztas and Hazinedaroglu - hired a subcontractor to build the pipeline at a discount rate but charged the state the full rate, the paper said. The companies were not required to bid for the contracts.
 Chief Prosecutor Cevdet Volkan on Thursday removed Yuksel from the investigation but was expected to appoint a new prosecutor to take charge of the corruption probe, the semi-official Anatolia news agency reported.
 Yuksel confirmed that he was removed from the case but did not say why.
 CNN-Turk television said Volkan was angered that Yuksel launched the investigation without first seeking the prosecutor's permission.
 The investigation could further implicate Ersumer and incriminate Deputy Prime Minister Mesut Yilmaz, the leader of Ersumer's Motherland Party, the junior partner in the three-party ruling coalition government, some analysts say.
 Yilmaz, as prime minister, signed the pipeline deal in 1997 despite strong opposition to an agreement with Russia.
 There are questions surrounding Yilmaz's brother's presence at some of the meetings with Russian energy officials.
 The project, known as Blue Stream, will carry 16 billion cubic meters of Russian natural gas a year through a 1,200-kilometer pipeline from Russia to the Turkish capital, Ankara.
 Turkey is scheduled to begin receiving the gas by late 2001 or early 2002.
 Stroitransgaz is a subsidiary of gas giant Gazprom, which is building the overall project - estimated at $3.2 billion.
 Italian oil and gas group ENI is involved in building the Black Sea underwater part of the pipeline.
 Many Turks believe that widespread corruption is the root cause of the country's current economic crisis that has led to a 40 percent fall in the value of the lira and massive layoffs.
 Turkey is close to sealing a financial rescue package to help it recover from the crisis but international money lenders want to see Turkey carry out reforms as well as see progress in the fight against corruption.
 Ersumer, who is alleged to have steered millions of dollars in government contracts to favored companies, has denied the allegations of wrongdoing.
 Yilmaz has defended Ersumer, accusing prosecutors and paramilitary police officials who initiated the inquiry of targeting Ersumer and of plotting to damage his political party.

TITLE: Russia's 'Madison' Lands Softly With Mars
PUBLISHER: Staff Writer
TEXT: MOSCOW - Oleg Rumyantsev wakes up at 6:15 a.m. to the sounds of Ekho Moskvy radio, brews himself a cup of coffee, puts on a tailored suit and slides into his Ford Taurus to drive to work.
 Once he walked the corridors of political power and was called Russia's James Madison for his efforts to give the country a democratic constitution. These days, though, he works at Mars, promoting the interests of the U.S. confectionery and pet-food giant.
 As a young parliament member and legal scholar, Rumyantsev had drafted a version of a new constitution for a new Russia. But that was a decade ago.
 His current job as Russia and CIS regional director of external relations for Mars, he says, is just as exciting and just as political.
 &quot;I stayed in politics - I participate in the Foreign Investment Council, meet with my former colleagues who have become ministers - so my work is not any less political,&quot; he says.
 After graduating from Moscow State University and the Moscow Institute for Legal Studies, Rumyantsev was elected in 1990 to the Congress of People's Deputies of Russia.
 His knowledge of Jeffersonian principles and his passion for developing participatory democracy led to an opportunity to begin work on constitutional reform.
 Rumyantsev was named secretary of the Constitutional Commission, which was formed in June of that year under the leadership of Boris Yeltsin and his deputy Ruslan Khasbulatov. Khasbulatov took over as head of the Congress' permanent legislature, the Supreme Soviet, when Yeltsin was elected president of Russia in June 1991.
 In the early 1990s, Rumyantsev remained loyal to Yeltsin and believed in his reform plans. But as the work on the constitution drafts continued, he grew increasingly critical.
 &quot;How could I not when he [Yeltsin] legitimized the worst characteristics of Soviet communist excesses in the framework of government policy?&quot; Ru myantsev says.
 By 1993, he had allied himself with Khasbulatov and produced a draft constitution calling for a parliamentary system. Rumyantsev's main objection to Yeltsin's constitutional proposals was that they concentrated power in the executive branch.
 Peter Reddaway, a Russian historian at Georgetown University and co-author of a new book titled &quot;Tragedy of Russia's Reforms: Market Bolshevism Against Democracy,&quot; said Rumyantsev's opposition to the president reached its culminating point when Yeltsin signed a decree on Sept. 21, 1993, disbanding the Congress of People's Deputies.
 &quot;That decree was the biggest single factor,&quot; Reddaway said in a telephone interview. &quot;He must have felt it undermined the constitutional basis for Russia's democracy.&quot;
 When members of Congress put up armed resistance, Yeltsin crushed their rebellion by ordering tanks to shell the parliament building on Oct. 4.
 &quot;Rumyantsev, a scholar-politician in his 30s who had gone from supporting Yeltsin to standing side by side with the nationalists in the parliament, tried to negotiate a settlement to the crisis,&quot; David Remnick wrote in his 1997 book &quot;Resurrection.&quot;
 &quot;But Rumyantsev found himself in danger,&quot; said Remnick, who was a Washington Post correspondent at the time.
 Alpha troops took him to the courtyard of a nearby building. According to Rumyantsev, a drunken soldier grabbed his beard and hit him in the face and then searched him for money, Remnick wrote. &quot;When the soldier discovered no riches on Rumyantsev, he beat him some more.&quot;
 Just two months after the October events, Yeltsin produced elections to a new bicameral parliament and a simultaneous referendum on a new constitution.
 The final version of the Constitution excluded the lion's share of Rumyantsev's recommendations, said Victor Sheinis, a constitutional expert at the Institute of World Economy and International Relations. &quot;It would be fair to call him an author of one of the proposed drafts, which acted as a source for the final version, but not of the Constitution we currently live by,&quot; Sheinis said.
 Rumyantsev says the 1993 Constitution restored an authoritarian system and failed to ensure the truly democratic procedures that could have prevented many of the abuses of the last decade.
 For instance, his proposed constitution would have prevented the unfair privatizations orchestrated by the oligarchs, he says. A system of checks and balances would have assured there would be &quot;no Black Tuesdays, financial defaults or arbitration court decisions to bankrupt companies on demand.&quot;
 After he turned against Yeltsin, Rumyantsev says he found himself on the president's black list and could not find work in Russia. He went abroad to teach at the University of Toronto and the London School of Economics.
 He returned in the fall of 1995 and made a few attempts to re-enter the political scene, as legal consultant to the State Duma and as a secretary in the parliamentary assembly of Russia and Belarus.
 But then Rumyantsev decided to put his own theories about democracy in a free-market economy into practice. When Mars offered him a job in 1998 to help it navigate Russia's muddy political waters, he accepted.
 &quot;Coming to Mars was my personal reincarnation,&quot; he says. &quot;I shaved my beard, threw away the old address book, and started a new life.&quot;
 Rumyantsev shows no traces of regret or self-pity as he talks about his trajectory from a prominent political figure to executive of a chocolate conglomerate.
 &quot;The world's leading transnational corporation with a strong internal culture, Mars was the best university I could find, and I didn't even have to leave the country,&quot; he says. &quot;I feel connected to a large, growing organism.&quot;
 Thanks in part to Rumyantsev's political connections, Mars not only stayed, but prospered on the Russian market.
 &quot;We don't give bribes - ever.&quot; Rumyantsev says, his eyes shining with pride. &quot;I work my connections, capitalize on people's disagreements, and use my own good reputation and the good name of the company to reach the necessary goals.&quot;

TITLE: Moscow Set To Propose New Debt Solutions
PUBLISHER: Reuters
TEXT: WASHINGTON - Russia will soon discuss a new plan to manage state debt that aims to help the country through peak payment years, said Deputy Finance Minister Sergei Kolotukhin.
 &quot;It will be an absolutely new approach - to solve the problem beforehand, not when it occurs,&quot; Kolotukhin said on the sidelines of the IMF/World Bank annual meeting late last week.
 Early this year, Russia found itself in a tight pinch when it missed some payments to the Paris Club of creditor nations because it hoped to restructure the $40 billion Soviet-era debt and did not provide for the full payments in the 2001 budget.
 The club did not agree to a restructure, and Moscow had to revise some budget parameters to catch up on the payments.
 Russia's most difficult year in terms of foreign debt payments is 2003, when the country has to pay more than $20 million, including $4 billion to the Paris Club.
 Payments then will be 50 percent of budget revenues. In 2002, Russia will pay $14 billion, or 35 percent to 40 percent of revenues.
 Kolotukhin said Russia planned to tackle the problem by approaching the Paris Club with a request for a restructure and would ask the International Monetary Fund to support it.
 It will also set up a reserve fund in 2001 and 2002 to accumulate funds for future payments, continue talks on swapping debt for investment and borrowing on international markets.
 Kolotukhin said Russia was in talks with investors to set the best time for Moscow to borrow.
 &quot;Our goal is a one-digit figure from the point of view of interest rates for not less than five or seven years,&quot; he said.
 &quot;We shall act selectively and borrow beforehand and, if needed, we shall accumulate the funds for future debt payments.&quot;
 Kolotukhin said Russia would start discussing the debt problem with the IMF and the Paris Club this year, hoping to reach some result by the middle of next year.
 &quot;I do not see a terrible problem with 2003, if we start solving it now and if there is no economic recession, or a fall in oil prices or incompetent fiscal policy,&quot; he said. &quot;Maybe, if the problem is solved favorably, we shall not need a restructuring from the Paris Club.&quot;
 Kolotukhin said that this year the government would also tackle some debts inherited from the Soviet Union.
 He said Russia would soon propose a restructure to the International Investment Bank and the International Bank for Economic Cooperation, to which Russia owed a combined $1 billion in principal debt.
 The IIB and IBEC were the two banks of the now defunct Council for Mutual Economic Assistance, the trade body of the former Soviet bloc.
 Kolotukhin said Russia would have to pay $15 billion to $16 billion in foreign debts in 2005 and $18 billion to $20 billion in 2008.
 He said the new debt approach would mean careful planning.
 &quot;As soon as there is a unified system of risk analysis, it will be clear what is to be done. This will become the basis for taking reasonable management decisions,&quot; he said.

TITLE: IN BRIEF
TEXT: Baltika Sues Minister
 

MOSCOW (SPT) - Baltika, the nation's largest brewer, on Monday filed a suit against Russia's chief sanitary inspector, Deputy Health Minister Gennady Onishchenko, over losses it says it suffered after he called for a crackdown on beer.
 In January he declared beer an addictive substance and called for regulations curbing advertising and banning the sale of beer with alcohol content higher than 6 percent to under 18-year-olds.
 Breweries lost 1.7 billion rubles of potential profits in the first quarter of 2001 due to the campaign against beer, which will be called off in March, Interfax reported, citing unidentified sources.
 Baltika, which says it lost 347 million rubles, is suing Onishchenko for a token sum of 1,000 rubles in the Moscow arbitration court, said Baltika's legal department head Alexander Sivkov in remarks reported by Interfax.
 
 
UES Chooses Board
 

KONAKOVO, Central Russia (Reuters) - Minority shareholders of national power grid Unified Energy Systems won two seats on its board hoping to influence the company's restructuring process.
 The shareholders annual meeting April 28 elected David Herne, Brunswick Capital fund manager, to represent foreign minority shareholders, and Alexander Lebedev, chairman of National Reserve Bank, to stand for Russian minority shareholders.
 Foreign minority shareholders have said they hoped to get two seats, and one of the shareholders attributed the failure to the fact that 2 percent of votes had been declared invalid.
 "There was a big number that was called invalid. We want to know if some that were for us were called invalid," he said.
 Three UES managers - CEO Anatoly Chubais and deputies Leonid Melamed and Valentin Zavadnikov - were also elected. Chubais had said he expected management to get two seats.
 The shareholders also approved doubled dividends for 2000 as proposed by the board. UES would pay a 0.02 ruble dividend per ordinary share and a 0.0738 ruble dividend per preferred share.
 
GDP Growth Revised
 

MOSCOW (Reuters) - The State Statistics Committee said Thursday it had revised gross domestic product growth in 2000 to 8.3 percent from 7.7 percent.
 The committee said in its monthly report the changes had been made due to new information on local and foreign trade, changes in industrial output figures and an introduction of a new methodology of fixed assets valuation.
 
 
Irkutskenergo Scuffle
 

MOSCOW (Reuters) - A months-long dispute between the management of a key Siberian utility and two giant aluminum firms for control over the enterprise seemed to have swung in favor of the latter at a shareholders meeting.
 An Irkutskenergo shareholders meeting on April 28 called by Russian Aluminum and SUAL-Holding installed Sergei Yesapov - a candidate supported by SUAL and the regional government - as deputy general director of the company in charge of finances.
 A rival shareholders meeting called by the existing board of directors was not allowed by a local court to proceed.
 The meeting also elected a new board of directors for the concern, on which five of 11 seats were taken by aluminum representatives, but could not agree on choosing a new general director, said SUAL spokesman Alexei Goncharov.
 
 
Far East, Taipei Link
 

TAIPEI, Taiwan (AP) - A Russian passenger jet flew to Taiwan in a pioneer flight to open air links with the island.
 The Vladivostok Air jet arrived at Taipei Airport shortly before midnight April 30 and departed for the Russian port two hours later carrying 147 passengers.
 Taiwan and Russia have no diplomatic relations, and the flight was marked in a low-key matter to avoid provoking China, an ally that considers Taiwan part of its territory.
 Under an air pact signed earlier, Vladivostok Air will have two weekly flights to Taipei. Taiwan's TransAsia Airways will begin flights to Vladivostok next month, officials said. 



TITLE: Leases: Is Registration a Must?
TEXT: ON Feb. 16, 2001, the Presidium of the Higher Arbitrazh Court of the Russian Federation issued Informational Letter No. 59, in which it provides a review of the court practice concerning the application of the Federal Law &quot;On the State Registration of Rights to and Transactions with Real Estate.&quot; The letter provides clarification of a variety of issues regarding the registration of different rights to real estate and of transactions with real estate, including certain clarifications regarding the registration of real estate lease agreements, which should be of interest to virtually every company doing business in Russia.
 The Civil Code of the Russian Federation provides, as a general rule, that there is a legal obligation for all real estate lease agreements to be state registered, unless otherwise provided by law (Article 609). The Civil Code itself provides for an exception to this general rule, stating in Article 651, with respect to lease of buildings and structures, that only if such lease agreements will be for a term of one year or more must they be state registered, and that they will only enter into force after such state registration. The recent court practice also extends this exception to the mandatory registration of lease agreements for nonresidential premises.
 In the informational letter, the Higher Arbitrazh Court has now provided the following three important clarifications of the above rules of the Civil Code: 
 First, if the parties to a building lease agreement provide that the conditions of their lease agreement are applicable to the lease relationships between the parties, which existed during a specified period of time before the conclusion of the lease agreement, then such period of time will not be considered when the parties calculate the term of the lease agreement for the purpose of determining whether or not it requires state registration.
 Second, in the event that the parties to a building or structure lease agreement, which was entered into for a term of less then one year, agree to prolong such lease agreement for the identical term after the expiration of the initial term or if it is automatically prolonged due to the appropriate provision of the lease agreement, the relationships between the parties are considered to be governed by a new lease agreement, which is not required to be state registered.
 Finally, if a building or structure lease agreement is prolonged for an indefinite term, then such lease agreement also does not have to be state registered, since, under Article 651 of the Civil Code of the Russian Federation, only those building and structure lease agreements must be state registered, which were entered into for a term of not less than one year and an indefinite prolongation is not considered to be one year or more.
 Please note, however, that these clarifications from the Higher Arbitrazh Court are based on actual cases that were considered by various arbitrazh courts, and it may well be that in another similar case, the courts will not necessarily apply the same rules indicated above, unless the case is exactly the same as the one on which the above clarifications were based. Therefore, the possibility of the application of the above clarifications to each particular new situation should be carefully examined.
 
 <i>James T. Hitch is managing partner and Maxim Kalinin and Alexey Trusov are associates at Baker & McKenzie law firm's St. Petersburg Office. </i>

TITLE: Property Managers Should Take Over Past Our Doors
TEXT: NEXT to communal apartments and monstrous abandoned Soviet Cold War factories, the bleakest characteristic of the St. Petersburg real estate scene is the typical apartment building staircase.
 Most apartment building entrances are unlocked or have almost useless code locks. The staircase is a mere extension of the street, inviting people off the street to just enough privacy to relieve themselves in the dark. Here lurks the vandal, the burglar, the robber. The revolting condition of the staircase depresses the market value of all the apartments, even if they have been fabulously modernized.
 Not that civilized dwellers want this situation. But the city long ago abandoned its responsibilities through its local <i>Zhilishchno-Ekspluatatsionnaya Kon tora </i>(ZhEK) management offices, to paint, repair and preserve cleanliness within the common areas of apartment blocks: the lack of funds has driven the caretakers out of work, and effort is concentrated out on the street, and sometimes in the courtyard if you are lucky.
 This will not change - even if the city government becomes awash with cash. And why should it? Hardly anywhere in the world do municipalities look after the insides of private housing blocks.
 With privatization of apartments and now individual rooms, and resettlement of communal apartments, the new house-proud owners want and expect maintenance and security to start at the street entrance. Indeed, the city government is encouraging this process, and wants to rid itself of any responsibility for what goes on behind the street door. 
 The logical process of transferring property management to property owners is picking up speed. Federal legislation in the 1990s on the formation of condominiums and then <i>Tovarischestvo Sobstvennikov Jilya </i>- or Private Property Organisations (PPO) - is specially designed to make the transition formal. Of course, modern society elsewhere has its legislation which empowers - indeed obliges - householders to manage their buildings and this works very effectively. For example, the Syndicat de Copropri&eacute;t&eacute; in France or the Body Corporate in Australia.
 The horrific red tape of the Russian tax system makes it very difficult and expensive to do this quite legally. In the growing number of buildings where the apartment owners collaborate to manage the common areas, this is mostly done unofficially with voluntary cash contributions from those who can pay.
 A typical situation in St. Petersburg is where about half the apartment owners in a building get together and pay 50 rubles per apartment per month for a three or four person shift of elderly concierges who sit behind the front door and keep the staircase clean.
 With new apartment buildings in St. Petersburg, the developer usually agrees beforehand with the city administration that the city will not provide most management services - the quarterly <i>kvartplata </i>payments are therefore less - and increasingly, a PPO is formed by the developer and taken over by the new residents when the building is completed.
 In apartment buildings where all flats are of a similar size and there are not many services, the management process is quite simple. Retired and unemployed householders have the time to organise security, cleaning and collection of dues on a voluntary basis. 
 In more sophisticated developments, with apartments of different sizes and perhaps some shops and offices, there are likely to be more features, and therefore a need for regular services such as gardening, security control, programmed cleaning and maintenance of equipment (ventilation, modern elevators etc.), which all require more professional management.
 Here it is necessary to employ specialist managers. In St. Petersburg, there are very few specialist property management companies. This is a new profession, which will be in great demand when at last communal apartments are in the minority in most old buildings, and as large multiple-occupied developments are constructed in the suburbs of St. Petersburg.
 One of the biggest obstacles to the growth of the property management profession is stubborn survival of Soviet attitudes. It is difficult to move away from the concept of the &quot;nanny state,&quot; which does everything free of charge - or so it seems. There is understandable reluctance to pay a private company for a service which the city is supposed to provide almost free of charge (if you can call this service).
 The profit to be expected in the private property management of an apartment building is quite small. However, economies of scale - where one company manages over about 10 buildings - will result in a reasonable profit. This new segment of the Russian property industry is yet to flower as it has in all capitalist countries, when the management company often operates also as a real estate agency. Here the manager is best placed to pick up sales and leasing instructions for the agency department.
 If the building in question is owned by one entity as an investment and is leased out as apartments, offices or shops to various tenants and tenant companies, additional main roles of the property manager are to lease out the space and collect arrears of rental from the tenants.
 It is, as we know, difficult and painful to move to a civilized market economy. Real estate is at the forefront of this transition zone, and property managers are in the front line. Lenin's nationalization of property did more long-term damage to real estate than anyone living in Western society can imagine. It will be many years before careful property refurbishment and management will undo the catastrophic results of his handiwork in the field of real estate. This process is now unfolding in St. Petersburg and in towns and cities across Russia.
 
 <i>Sebastian FitzLyon is General Director of S. Zinovieff & Co. real estate valuation firm. </i>

TITLE: Blair Bond Plan To Jump-Start Generation
TEXT: NEW HAVEN, Connecticut - Tony Blair's re-election campaign opens a trans-Atlantic dialogue on the future of equal opportunity. While President George Bush pushes for an enormous tax cut, Blair, the British prime minister, proposes giving the next generation a start toward economic security and independence.
 Blair's big idea is to guarantee each child a financial stake. Every infant born in Britain would receive a baby bond worth between $450 and $750, which would mature when he or she reached 18. The Treasury would make additional deposits of $75 to $150 when the child was 5, 11 and 16. Thanks to compound interest, young adults would start life with as much as $7,500, which could be used for a variety of purposes - from college tuition to buying a home, from starting a business to a rainy-day fund.
 Blair's proposal puts real substance into idle talk about a third way between socialism and capitalism, and stands in sharp contrast to President Bush's plan for a large tax cut. Blair's proposal affirms the values of private property, personal responsibility and economic freedom while also giving all young adults, not just the lucky few with rich parents, a chance to take charge of their lives.
 President Bush's commitment to leave no child behind is fine, but not enough to equip adults for freedom - especially those Americans who don't go to college. University students get enormous subsidies, but they are not in the majority. The rest of America needs cash in the bank to withstand economic shocks and gain economic self-confidence.
 The stakeholding idea has a rich history. In 1797, Tom Paine argued that all new democratic republics should guarantee each 21-year-old citizen a grant equivalent to 15 pounds. Over the last decade, academics and politicians have looked again at stakeholding. Moderate Democrats have proposed government-funded children's savings accounts. And this year, the Bush administration even included a small amount in its budget for individual development accounts, which help the poor build assets. But Tony Blair is the first major world leader to put stakeholding where it belongs - at the top of the list of political priorities.
 What if Bush had approached his budget in the same spirit as Blair? Suppose the president had dedicated $1.35 trillion over 10 years, not to a tax cut, but to a baby-bond plan. That sum would finance an annual bond program of $135 billion, giving each of the four million babies born in America each year a bond of almost $34,000. With interest, these bonds would (conservatively) yield $50,000 when they matured.
 The Blair government is considering whether to restrict the money's use to ensure responsible spending. We suggest that a U.S. program give full control only to high-school graduates.
 We believe that a nation committed to equal opportunity can make a sizable commitment to its young citizens. But if these numbers seem outsize, consider what even a portion of the tax-cut dollars could mean for an American-style baby bond. With these bonds, the adults of the next generation would start off with a stake in America and take their rightful place as members of a property-holding democracy.
 
 <i>Bruce Ackerman and Anne Alstott, law professors at Yale University, are authors of &quot;The Stakeholder Society.&quot; They contributed this piece to The New York Times. </i>

TITLE: EU Talks Hurdles With New Candidates
PUBLISHER: The Associated Press
TEXT: NYKOEPING, Sweden - The European Union assured its eastern neighbors on Sunday they will join the bloc soon, yet several candidates expressed dismay at new hurdles slowing their entry.
 The 15 EU foreign ministers met their eastern counterparts in this coastal town, 100 kilometers southwest of the capital, Stockholm, to discuss Europe's economic and political integration in the future.
 Among the sensitive topics in talks with the most likely early entrants - Poland, Hungary, Estonia, the Czech Republic, Cyprus and Malta - was the right of workers to settle anywhere in the EU.
 The European Union was also divided by quarrels over requests for handouts from poor newcomers due to join the bloc in the years ahead.
 But Swedish Foreign Minister Anna Lindh said Sunday she remained optimistic that the issues would be settled by July.
 &quot;We now have a lot of difficult issues on the table because we are close to the final [entry] negotiations&quot; with the most promising EU candidates, she said at a press conference.
 The European Union is supposed to swell from 15 member states to 27 over the next decade. It has set no entry dates, but the most promising candidates may join as early as 2004.
 The European Commission estimates that admitting 10 East European countries to the EU could result in a migration to the more prosperous west of 3.9 million people over 30 years. Most are expected to go to Germany and Austria.
 During the foreign-ministers meeting, Germany and Austria sought a seven-year waiting period before workers from Eastern Europe can come to the EU. Spain and Portugal said they would back this measure only if they are guaranteed regional-aid funding after poorer newcomers join.
 Polish Foreign Minister Wladyslaw Bartoszewski criticized Germany and Austria for seeking the transition period.
 &quot;I don't believe there will be a flood [of cheap labor]. I don't think such draconian limitations for workers are necessary,&quot; he said.
 Czech Foreign Minister Jan Kavan said the waiting period &quot;has nothing to do with real facts, [but shows] the European Union is prepared to see us as a second-class country.&quot;
 Spain said it was worried eastward expansion will jeopardize EU aid of $38.3 billion that flows to its impoverished regions in the period from 2000 to 2006.
 Prime Minister Jose Maria Aznar has threatened to scuttle the entry talks unless he gets a guarantee that aid for Spain will not be cut. &quot;We don't want to hinder or slow down enlargement,&quot; Spanish Foreign Minister Josep Pique said.
 Other sensitive topics in weekend talks included the question of how fast to mesh East European farmers into the EU's common agricultural policy. Poland alone has 10 million farmers - as many as the entire EU, which already has a tough time keeping farm subsidies under control.
 The European Union also still has to agree on a time frame for candidates to meet EU environmental standards.

TITLE: British Telecom Rolling Out Major Restructuring Plans
PUBLISHER: The Associated Press
TEXT: LONDON - The board of British Telecommunications is scheduled to meet on Tuesday to put the finishing touches on a restructuring plan that includes spinning off its wireless operations, people close to the company said Monday.
 The board is also expected to vote on a proposal to raise $7 billion by issuing equity to existing shareholders in what would be the largest such issue in Britain's corporate history, these people said. Also on the agenda is British Telecom's final dividend, which is likely to be reduced or eliminated, the people said.
 The company is scheduled to unveil its latest restructuring plan on May 17, when it releases full-year financial results, which are expected to show a steep decline in profit. Pending the outcome of the board meeting, that announcement could be moved up to this week, people close to the company said.
 Gerard Bithell, a company spokes person, declined to comment.
 Also expected this week is a report from British regulators, who have been reviewing the dominant market position of Yell, British Telecom's directories business. The release of the report has been expected for the last month and should come out before the general election.
 Prime Minister Tony Blair is expected to call an election for June 7, which should pave the way for a sale of Yell to a group of private investors, who have been unwilling to complete a deal while the intentions of competition authorities remain unknown. Several companies have shown interest in buying the business, valued at $4.3 billion, including Kohlberg Kravis Roberts. The favored bidder is a group consisting of Apax Partners and Hicks, Muse, Tate & First, people close to the talks said.
 British Telecom is also considering exiting Concert, a $7 billion joint venture with AT&T that provides communications services to large companies, though a decision is not imminent, people close to the companies said.
 The board meeting will be the first led by Sir Christopher Bland, who replaced Sir Iain Vallance last week as British Telecom's chairman. The latest plan to cut debt and remake British Telecom into a more efficient company replaces a strategy unveiled in November, the cornerstone of which included initial public offerings of several divisions, including BT Wireless and Yell.
 BT Wireless includes Cellnet in Britain, Viag Interkom in Germany, Telfort in the Netherlands, Esat Digifone in Ireland and a stake in Cegetel in France for a total value of $28.7 billion, analysts said.
 Last week, British Telecom took several steps toward its goal of cutting some $43 billion in debt by a third this year, when it said it would sell stakes in major Japanese and Spanish wireless businesses to the rival Vodafone Group for $6.9 billion. The company said it would receive $500 million by selling its 33 percent stake in the Maxis Communications mobile-phone operator of Malaysia. And the company stands to raise as much as $1 billion from a sale of its London headquarters.

TITLE: Japanese PM To Pursue Reforms
PUBLISHER: The Associated Press
TEXT: TOKYO - Promising change on a revolutionary scale, Japan's new prime minister pledged on Monday to pursue deep reforms &quot;without sanctuary&quot; to overhaul the country's troubled economy.
 In his first major speech since taking power last month, Junichiro Koizumi also warned the country that the structural changes could lead to higher unemployment and other painful side-effects.
 But in the long-term, Koizumi predicted that the implementation of a more open, competitive system and a scaling down of massive government public-works projects would lead to a more prosperous Japan.
 &quot;The top priority entrusted to me is to reinvigorate the economy and establish a society that's full of confidence and pride,&quot; Koizumi told Parliament, reiterating vows of &quot;economic, fiscal, administrative, social and political structural reforms.&quot;
 In his 30-minute address before Parliament, Koizumi also outlined plans to privatize Japan's postal savings system and look into amending the constitution to allow the direct popular election of prime minister.
 Koizumi also pledged to rebuild the country's debt-riddled financial sector, reign in government debt by limiting new bond issues to 30 trillion yen ($245 billion) in the 2002 fiscal year, and promote work opportunities for women.
 Koizumi, who has staked his career on reform, took office last month after defeating the old guard of the long-ruling - and increasingly unpopular - Liberal Democratic Party.
 The new premier has made structural reform of the troubled Japanese economy the centerpiece of his tenure. The country is in the 11th year of an economic slowdown, and a long-awaited recovery is fizzling.
 On Monday, Koizumi pushed the idea of revolutionary change, comparing the coming era to the 1868 Meiji Restoration that ended Japan's feudal period and began its race to catch up with the West.
 &quot;I want to carry out reforms that could be called the 'New Century Restoration,'&quot; he said. &quot;We want to establish a new economic and social system that's appropriate for the 21st century.&quot;
 &quot;Through such structural reform, inefficient elements have to be weeded out, and it may cause a situation that would involve pain in society,&quot; he said, adding that the government would move to support the unemployed.
 Koizumi took over for Yoshiro Mori, whose political gaffes and failure to revive the economy had driven the government's support ratings to below 10 percent and triggered calls for his resignation.

TITLE: Turkey Announces Plans For Recovery From Crisis
PUBLISHER: The Associated Press
TEXT: ANKARA, Turkey - Turkey has drafted laws to privatize Turk Telecom and restructure the banking sector - two measures crucial for securing international loans to back a crisis-recovery program, the economy minister said Sunday.
 Turkey's parliament will debate the measures early next week, and passage may help secure $10 billion in loans from the International Monetary Fund and the World Bank, Kemal Dervis told journalists.
 The IMF's executive board is expected to approve the loan package, designed to ease a crisis that has seen Turkey's currency plunge and unemployment soar, when it meets in Washington on May 15.
 Lenders have called on Turkey to privatize Turk Telecom and restructure the banking sector, seen as a key cause of the crisis.
 Dervis said Sunday the government had agreed on a draft law that would allow a block sale of up to 45 percent of Telecom shares.
 The arrangement will allow the government to veto key decisions, and is designed to ease the concerns of Turkey's powerful military, which relies heavily on Turk Telecom for its communications. Military officials warned the government last week not to allow foreign investors to take full control of Telecom.
 Selling less than a majority share, however, could make Telecom less attractive to buyers. Previous efforts to sell blocks of up to 33 percent of Telecom shares have been unsuccessful.
 Dervis said the banking law would give the state more power to intervene when private banks run into trouble.

TITLE: IN BRIEF
TEXT: Tobacco Gets Stay
 

NEW YORK (Reuters) - Three U.S. tobacco companies have arranged a stay of the massive punitive damage awards against them in a landmark class-action sick-smokers suit, assuring that they will not have to pay their share of the $145 billion Engle verdict while their appeals are pending.
 Philip Morris Cos. Inc. and Lorillard Tobacco Co. on Monday said an agreement for the stay between the companies and the class of plaintiffs had been approved by the Florida court in the suit.
 Lorillard, a unit of Loews Corp., said a third tobacco company was part of the agreement. R.J. Reynolds Tobacco Holdings Inc. identified the third company as Liggett Group Inc., a division of Vector Group Ltd..
 In July 2000, a six-member jury in Miami awarded $145 billion in punitive damages to plaintiffs in the so-called Engle sick-smokers case. It was the largest damage award ever handed down by a U.S. jury.
 
 
EU Talks Up Euro
 

BRUSSELS, Belgium (AP) - European Union finance ministers insisted Monday that the introduction of the euro would not add to inflation because measures are being taken to ensure merchants don't take advantage of the conversion to raise prices.
 European Parliament members raised the concern at a morning session with EU finance ministers before their regular monthly meeting, according to Belgian Finance Minister Didier Reynders.
 But he said there were no "economic flares" linking inflation to the introduction of euro bills and coins, which will replace national currencies in 12 EU nations starting Jan. 1.
 "In fact, in most countries measures have been taken for the rounding up or rounding down to the euro in ways which would benefit consumers," said Reynders, speaking on behalf of the group.
 
 
Argentine Debt Swap
 

BUENOS AIRES, Argentina (AP) - Argentina reached an agreement in principle Saturday with a group of international banks to swap government bonds in order to postpone debt payments and aid the country's struggling economy.
 The swap of short-term for longer-term bonds could allow the government to postpone for up to 30 years payments on some bonds due to mature soon and head off a fiscal crisis.
 The government has not announced the value of the bonds being traded, though news reports have said it could be more than $20 billion. In a similar deal in February, the government exchanged $3.6 million worth of bonds due to mature soon for $4.2 million of bonds maturing in 2006-2007.
 "This means relief in the country's financing needs through the coming years," presidential spokesperson Ricardo Ostuni said in a written statement.
 
 
Williams To Buy Barrett
 

NEW YORK (AP) - Williams Cos. said Monday it will buy natural gas producer Barrett Resources for $2.5 billion in cash and stock, topping a $2 billion hostile bid by the U.S. unit of Royal Dutch/Shell Group.
 Two hours after the announcement, Shell said it would drop the effort it started in March to acquire Denver-based Barrett.
 "Shell decided to take this action because of its unwillingness to increase its offer beyond a level that makes economic sense to Shell," the company said in a statement.
 Barrett put itself up for sale last month after rejecting Shell's initial offer for the company. Names of other bidders were not disclosed.
 Williams, a Tulsa, Oklahoma-based energy trader and pipeline operator, produces about 15,000 megawatts of electricity now but plans to triple its power generation over the next few years.
 
 
Refineries Purchase
 

SAN ANTONIO, Texas (AP) - Valero Energy Corp. is buying rival Ultramar Diamond Shamrock Corp. in a $4 billion cash and stock deal that would create the nation's second largest oil refiner.
 Once the deal announced Monday is completed, San Antonio-based Valero would have $32 billion in annual revenue, 23,000 employees, 13 refineries and more than 5,000 retail outlets.
 Valero said it would trail only Irving-based Exxon Mobil Corp. in refining capacity in the United States.
 Valero would add seven refineries with a combined capacity of 850,000 barrels of oil per day. Valero would also expand its presence in Texas and California and expand into Colorado, Oklahoma and Quebec Valero chairman and chief executive Bill Greehey told analysts.
 Both companies' boards of directors have approved the deal, which still needs approval from both companies' shareholders and from federal regulators. 



TITLE: Missile Misjudgement
TEXT: PRESIDENT Bush has presented the outline of his missile-defense program. But it's important to compare his ambitious rhetoric with the realities of existing missile defense projects and the likely reactions that such a missile-defense program will provoke around the world.
 First, there is no workable missile defense on the horizon. The Clinton administration's land-based National Missile Defense program, which was far less ambitious than the multi-tiered approach favored by Bush's Secretary of Defense, Donald Rumsfeld, failed two out of three rudimentary tests. And critics, such as Theodore Postol at the Massachusetts Institute of Technology, have charged that the entire NMD test series was rigged to hide serious flaws that exist in the system.
 The sea-based, &quot;boost phase&quot; intercept option favored by many missile-defense advocates would involve building an entirely new interceptor missile, which at this time is not even on the drawing boards. And by the Pentagon's own optimistic projections, the first test of its latest space-based laser won't happen until 2012, at the earliest.
 It's important to remember that a ballistic missile is the least likely method an adversary would choose for delivering a nuclear weapon to U.S. soil, according to experts within the intelligence community. That's because a ballistic missile has a &quot;return address&quot; - the identity of the attacking nation would be known immediately, and that nation would be subjected to a devastating retaliatory attack by U.S. forces.
 Beyond that, an early decision to break out of the Anti-Ballistic Missile (ABM) treaty and deploy a missile-defense system could spark a renewed global nuclear arms race, thereby causing more security problems than it will solve. Reports published last year in the Los Angeles Times cited a classified U.S. intelligence assessment which suggested that deployment of a missile defense would set off &quot;an unsettling series of political and military ripple effects ... that would include a sharp buildup of strategic and medium-range nuclear missiles by China, India, and Pakistan and the further spread of military technology in the Middle East.&quot;
 The multi-tiered system of the kind preferred by Rumsfeld will be enormously expensive, dwarfing the $60-billion price tag for the Clinton NMD system and creating a huge potential windfall for the major defense contractors. In the short-term, annual research-and-development resources devoted to missile-defense projects of all kinds will probably increase by at least $2 billion per year, bringing total missile-defense spending up to $7 billion per year and making it the largest program in the Pentagon budget.
 An accelerated development program that pushes forward land-based, sea-based, and space-based options simultaneously could cost $10 billion or more a year. The whole effort, including expansion of radars and space-based sensors, construction of interceptor missiles and laser systems, and all the other elements of a multi-tiered system, could cost anywhere from $120 billion to $240 billion over a 20-year period.
 This represents a huge potential windfall for the four major missile-defense contractors - Boeing, Lockheed Martin, Raytheon, and TRW. These firms have received nearly two-thirds of all missile defense R&D spending over the past several years, and have already racked up long-term missile defense contracts worth in excess of $20 billion.
 There are other methods of dealing with the threat of a ballistic missile attack from such nations as North Korea, Iran or Iraq that would be far less costly and far more effective than building a multi-billion dollar missile shield. Bush's decision to walk away from the framework talks with North Korea, just as negotiators were on the brink of instituting a verifiable ban on Pyongyang's ballistic missile testing, production, and exports, is the most obvious example of this administration's unwillingness to utilize hard-headed diplomacy as a tool to prevent the spread of ballistic missiles.
 The president's comments on NMD suggest that nuclear policy in the Bush administration is dominated by a hardline group of nuclear unilateralists who are much more interested in undermining arms control than they are in coming up with a cost-effective defense strategy. Rumsfeld's longstanding associations with ideologically driven, pro-missile defense think tanks, such as the Center for Security Policy (CSP) and Empower America, go a long way toward explaining his current positions on missile defense. These organizations and their ardent followers believe in &quot;peace through strength, not peace through paper,&quot; as Republican U.S. Senator Jon Kyl of Arizona put it at one CSP gathering.
 From the point of view of these anti-arms-control ideologues, destroying the ABM treaty is a positive achievement in its own right, regardless of the current status of U.S. missile-defense programs.
 Add to this the enthusiasm of key Bush advisers for developing a new generation of allegedly more &quot;usable&quot; low-yield nuclear weapons, and it becomes apparent that unless Secretary of State Colin Powell and other moderates within the administration are given a greater say in nuclear-weapons policy, Bush runs the risk of encouraging global &quot;nuclear anarchy,&quot; a situation under which every single country builds up its own conventional and nuclear arsenal according to a worst case assessment of the intentions and capabilities of its adversaries, real and imagined.
 Before he throws away four decades of progress on arms control and risks sparking a new arms race, the president should rethink the consequences of his speech and readjust the direction of his policy to bring it into line with strategic, political and economic realities.
 
 <i>William D. Hartung is the president's fellow at the World Policy Institute at New School University in New York. He contributed this comment to the Global Beat Syndicate. </i>

TITLE: NASA's Outrage Is Hypocritical
TEXT: <i>&quot;U.S. company Spacehab is set to build the Enterprise module, the [International] space station's first truly commercial unit. This segment could be useful to tour operators in numerous ways, perhaps converted into condominium-like living quarters specially geared for sightseeing stopovers.&quot;</i>
 - space.com, May 5.
 
 AT NASA, they're a bit peeved about the Russians sending a 60-year-old California pension fund manager into orbit.
 NASA has complained that Dennis Tito, who paid somewhere in the ballpark of $20 million for a Moscow-brokered ride on the International Space Station, was getting in the way up there. And what if he had broken something! NASA chief Dan Goldin told Congress last week that NASA will bill Russia for any delays Tito's visit may have caused in the ongoing construction of the ISS - though it's not clear if there were any.
 The space station has been built with billions of dollars of public money, and Tito used part of his personal fortune to shoulder his way to the head of the line of would-be ISS astronauts.
 But it is a bit much to hear NASA complaining about this. After all, NASA pioneered the sending of senators and other celebs into orbit. Consider the 1985 space shuttle flight of Senator Jake Garn - who returned to Earth and promptly asked for more money for NASA. Or the public-relations stunt of bringing Senator John Glenn out of astronaut retirement.
 Or consider NASA chief Goldin's effusive praise of James Cameron, the director and producer of the movie &quot;Titanic,&quot; and another would-be space tourist.
 &quot;I'd like to make a contrast [with Tito] here, because there is an American patriot who understood how to do this,'' Goldin told Congress. &quot;That gentleman's name is James Cameron, who approached me some six months ago and asked about going to space.''
 The contrast seemed to boil down to: Cameron is waiting for NASA to make up its mind, instead of sneaking on board via Moscow. Goldin also characterized Cameron as a superior candidate to Tito, on grounds that Cameron would use his time in space to make what would amount to PR films for NASA.
 NASA and the Russian space program both have ambitious, expensive plans. NASA doles out its space-tourist slots as PR stunts to get that funding from Congress; Russia sells its slots directly. The one approach is not morally superior to the other; both are equally ad hoc and frivolous. And both lead toward the commercialization of space.

TITLE: Extra Pay Can't Heal Military's Old Wounds
TEXT: RUSSIAN troops began the &quot;antiterrorist operation&quot; against separatist forces in Chechnya in 1999 at the same time as the Defense Ministry was preparing a special all-volunteer airborne brigade to serve as peacekeepers in Kosovo under NATO command. Russian peacekeepers in Yugoslavia are paid lavishly in comparison with troops serving at home - up to $1,000 per month. In the fall of 1999, President Vladimir Putin announced that the solders fighting &quot;terrorists&quot; would be paid no less - up to 950 rubles per day (more than $30).
 In fact, many <i>kontraktniki</i> who enlisted to serve in the Balkans in 1999 were sent instead to fight in the Caucasus. Later, soldiers who had already served a tour in Chechnya were sent to Kosovo.
 The Russian force in Kosovo is only 3,616 men and in Bosnia some 1,500 more: In Chechnya, at the height of the fighting last year, there were over 100,000 servicemen. Perhaps back in 1999 the Kremlin really thought that the war in Chechnya would be over quickly and the bill for extra pay wouldn't amount to that much. Now, the tab has ballooned to about 3 billion rubles ($110 million) per month. 
 Finance Ministry officials say that in fiscal year 2000 the extra-budgetary expenditure on the war in Chechnya amounted to 60 billion rubles ($2.2 billion). Some 30 billion rubles were spent on extra pay, 7 billion on &quot;reconstruction of Chechnya&quot; and the rest on extra equipment procurement, supplies, transportation of troops and so on.
 The extra-budgetary expenditure on operations in the Northern Caucasus in 1999 adds some 30 billion rubles more to the total. Today, the war in Chechnya is in its third fiscal year, with total costs fast approaching $4 billion. But that doesn't give the whole story. The official exchange rate does not fully reflect the real purchasing power of the ruble, which was grossly undervalued after the sharp devaluation in 1998. The corrected dollar equivalent of all extra-budgetary expenses on the &quot;antiterrorist operation&quot; in Chechnya may be estimated to be at least $10 billion - a cost that Russia can hardly afford.
 The Finance Ministry has been trying to get a grip on this growing bill. Putin has announced that beginning in May, extra combat pay will be abolished and replaced by a cheaper system of bonuses. But will this solve the problem?
 Since 1994, Russia has been fighting an intermittent war in Chechnya without any serious procurement of heavy equipment or munitions. Instead, the Defense Ministry has each time dipped deeper and deeper into Soviet Cold-War stocks.
 Troops in Chechnya have made use of heavy artillery, and this has depleted munitions stockpiles, as there has been no serial production of heavy shells in Russia for a decade. During the 1994-1996 war, officers said that they were using shells produced in the 1980s. In the present conflict, shells produced in the 1970s and even the 1960s have been supplied. 
 Reports from Chechnya say that troops are running out of ammunition for the most-used heavy gun - the 122-millimeter D-30 howitzer. One of the remedies being considered by the General Staff is to bring the pre-World War II M-30 122-millimeter howitzer out of strategic storage. Millions of rounds of shells for this weapon have been kept in storage since the 1940s.
 The equipment used in Chechnya breaks down even when it is properly managed. Outdated munitions misfire, killing and maiming troops and further affecting morale. The armed forces in Chechnya are trapped in a vicious cycle of degradation. And Putin's new pay scheme isn't going to break it.
 
 <i>Pavel Felgenhauer is an independent, Moscow-based defense analyst. </i>

TITLE: Investing in Russia, Pentagon-Style
TEXT: They had millions of dollars and a mandate from Washington: Help demilitarize the Russian economy, and feel free to get rich along the way if you can. But six years later, a former employee has accused them of frittering away the money, and the Pentagon is conducting a criminal investigation. The program’s backers concede some mistakes, but argue the jury is still out on the Defense Enterprise Fund. Matt Bivens reports. <p>MATTHEW Maly is passionately holding forth in his kitchen about everything wrong with U.S. foreign aid to Russia. It's a field in which he has worked for the past few years, and he spins tales of greed and incompetence: of a failed scheme to coax gold out of trash; of a bungled telecom investment that sucked the American and Russian governments into a little-known spat; of a book published by USAID and then bought back and shredded by USAID.
 Maly's harshest stories involve the U.S. Defense Enterprise Fund, an organization given $67 million by Congress and told to shepherd Russian military scientists and factories into civilian work. Maly worked at the DEF from 1996 to 1999, right up until management laid off the last 16 employees of what had once been a 48-person staff. Struggling to communicate his exasperation with his time there, he launches into what seems a long digression:
 In 1985, Maly was a recent emigre to the United States and a graduate student at Columbia University. One day, a fellow countryman is steered to Maly's New York doorstep by relatives back in Moscow. This man, Vladimir Furman, introduces himself as a brilliant inventor who has developed a vague sort of water heater that will be able to cheaply satisfy the energy needs of the entire planet known as Earth. All he needs is some money.
 &quot;He says, 'Introduce me to George Bush,'&quot; Maly said. &quot;I tell him I don't know George Bush. He says, 'Then introduce me to some millionaires.' I don't know any millionaires, I'm a poor grad student.
 'Who do you know?'
 'I know my geography professor.'
 'OK, let's go meet your geography professor.'&quot;
 They go. Furman waxes eloquent about his miracle heater and tells the professor he could sell the technology to him for $2 billion. Perhaps the professor should get some investors together?
 &quot;Later, we are all three walking down the street in New York, and Furman stops and stares up at this skyscraper. We say, 'What are you doing?' and he says, 'I'm contemplating buying this building after I sell my technology.'&quot;
 Thirteen years later, Maly was working in Moscow at the DEF, and growing ever more frustrated with the fund's management. One day his boss told him he had just met a Russian scientist - a Vladimir Furman - and the DEF was going to invest in some of his ventures.
 It was the same Furman. Maly says he immediately told his boss, DEF senior vice president Richard Nordin, that Furman was crazy.
 Nordin - a 47-year-old burly former U.S. military paratrooper who runs the DEF's Moscow operations - confirmed that in an interview.
 &quot;Matthew claimed he knew Furman and that he was crazy,&quot; Nordin said.
 Maly's cautions aside, the DEF and Furman went into business. Nordin said the DEF invested $110,000 into a project brought to them by Furman to commercialize a lubricant to make machinery less abrasive.
 Nordin said the science belonged to another man, and the DEF's technology experts judged it sufficiently promising to flirt with. Therefore Furman himself, Nordin said, &quot;was not all that critical to the deal.&quot; Among other things, the $110,000 investment let the DEF test-run the lubricant on the equipment of AvtoVAZ, Russia's largest car manufacturer. DEF officials concluded the lubricant did not work well enough to justify pursuing it commercially.
 Another consideration was that Furman - who could not be found for this article - was apparently a pain in the neck. &quot;Mr. Furman was doing ever increasing amounts of screaming and shouting, and we just cut him off,&quot; Nordin said.
 
 <b>A 'Missing' $41 Million?</b>
 Over the years the DEF has spent $67 million on obtaining and managing stakes in businesses in Russia, Ukraine and Kazakhstan. The businesses all must somehow qualify as &quot;conversion&quot; - as somehow moving an institution or its personnel out of the Soviet military past and into a free-market future.
 Early on, the DEF indulged itself in six offices in four nations (including offices in Richmond, Virginia, and Washington), and managers were asserting that business was too good to handle - that they would have to set up a second, private fund to deal with it all.
 That never happened. Instead, the DEF managers have spent lots of time over the years trying to extract themselves from bad situations.
 These days, Nordin manages the portfolio out of the offices of Russia Partners, a Moscow-based fund manager. It's a far cry from the 50-person DEF team of 1998, which Nordin said some years cost as much as $7 million to run. Managing the modern-day DEF is so low-key that last year Nordin had time to take on an extended stint as acting president of another Russia Partners property, MTV Russia.
 On busier days, when Nordin needs help on a DEF project he can mobilize a dozen or so Russia Partners employees. But instead of scouting for the next big thing, the job now is unraveling old problems, recovering long-lost money and planning for the day when the DEF's modest portfolio - stakes in six companies worth about $26 million - can be &quot;harvested&quot; for cash. (More fun is planning what to do with that cash. Nordin said the Pentagon's Defense Threat Reduction Agency - the DEF's main supervisor - would put the money back into conversion in Russia, this time probably as a grant of some sort.)
 How did the DEF turn $67 million into a handful of investments worth less than half that? Where did the other $41 million or so go?
 There are many ways to tell that story. One way would be to reject the premise: The figure of $26 million can be reached by updating a Pentagon report issued last August that said the DEF portfolio included seven companies valued at $31 million. (One company valued at $5 million has since dropped out.) But Nordin said it was he who gave the Pentagon that figure, and he characterized it as a back-of-the-envelop guess. He also argued against trying to put a value on the DEF portfolio before it is harvested.
 But it is Maly's version of events - angry, impassioned, at times unapologetically speculative - that has launched a series of official investigations in Washington.
 About $20 million, according to Nordin, was spent just running the DEF for six years - on the rent, the staff compensation, the legal and consulting fees. That might raise some questions about costs, and indeed an internal DEF study rapped the American managers for running an expensive shop.
 It would also leave another $21 million or so to account for. At least some of those &quot;missing&quot; millions can be chalked up to Furman's super lubricant and other investment misadventures. For Maly, 42, this has always been the story: bad investments, bad management. In July 1999, as he and others were laid off, he was furious to think DEF's managers might consign talk of mismanagement to the fires of the ruble devaluation.
 That month, he wrote a six-page letter to William Taylor, a top State Department official in Washington who then oversaw assistance to the former Soviet bloc, asking him to look into &quot;a catastrophic situation with the DEF's investments.&quot; Maly wrote that the DEF's troubles were caused by &quot;serious wrongdoing&quot; on the part of its managers, and he singled out Nordin by name. He said DEF managers failed to do proper due diligence before investing, failed to keep control over money once invested, hired incompetent staff, did not avail themselves of enough legal advice and were generally sloppy and free with the money in their care.
 The managers of Enterprise Funds like the DEF (see related article) are allowed to set up their own venture capital funds and start beating the bushes for private cash. But this is hard to justify unless they are well on their way to having fully invested their public monies. Maly and other DEF employees say there was a constant urgency to invest rapidly, and Maly argued in his letter that DEF managers were in a rush because they had their eyes on the prize of their own fund.
 &quot;The DEF rule was: Never, ever do any due diligence lest it interfere with the speed of investment,&quot; Maly says.
 Maly also wrote that DEF management &quot;may have violated U.S. law,&quot; although in that letter he was vague as to how. Later Maly made clear he was referring to payments the DEF made to a former deputy prime minister, Valery Serov, for lobbying work. Maly suggested the DEF's 1998 payments to Serov - who at that time was out of office and who today is a vice president of the natural gas company Itera - were cash delivered in brown envelops, and so may have been bribes.
 That's a serious allegation, and it's worth noting it's based on hearsay: Maly claims no direct knowledge of dollar-stuffed envelops, he only says he was told of them. (He has named his sources to investigators, but those people could not be reached for this article.)
 Serov in a telephone interview dismissed talk of being paid in cash as &quot;complete delirium.&quot; Nordin is equally testy on this point. He refuses to comment on the size of Serov's payments - Maly, again citing office colleagues, has put them at $20,000 a month - but he said flatly Serov did not get paid in cash &quot;in brown envelopes, or in any other color envelopes.&quot;
 Many who worked at the DEF or had dealings with it - including some who, like Maly, believe the fund was poorly managed - recoiled when told of Maly's suggestion Nordin paid bribes.
 Consider Paul Thomas, an American who runs the Ukrainian auditing and assets appraisal company IRE. Thomas has worked with both Maly and Nordin on a DEF project in Kiev, he has been in business in the former Soviet Union for more than eight years, and Maly lists him as one of his character references. Thomas was surprised to hear that, in addition to slamming the DEF as poorly run, Maly had suggested Nordin might have knowingly paid bribes.
 &quot;Rich Nordin is a Boy Scout!&quot; Thomas exclaimed indignantly. &quot;He makes George Bush Sr. look like a pickpocket! It's incomprehensible that this guy, who fought for God and country in [the 1989 invasion of] Panama, is somehow giving bribes to enrich himself. Matthew [Maly] is really grabbing at straws on that one - it's not good for him and patently unfair to other people.&quot;
 (Nordin actually helped invade Grenada, not Panama, but point taken.)
 Maly counters that he never pretended knowledge he did not have, and only suggested the State Department examine the matter. And he points out that no action was taken for 13 months after he wrote his letter: Only last August did the Pentagon's Defense Criminal Investigative Service open up a probe.
 Nordin said the Pentagon is obliged to investigate any such accusation, no matter how well or poorly documented. He and other DEF managers say they expect to be exonerated. &quot;Every so often [the Pentagon investigators] will call and ask for something,&quot; said Robert Odle, a lawyer representing the DEF board. &quot;We've prided ourselves on trying to reply instantly.&quot;
 
 <b>'A Shitty Job' Investing</b>
 If they firmly reject suggestions they somehow violated U.S. law, the DEF's managers are more willing to concede the fund was not a triumph of management. In fact, Nordin himself in a September 1999 e-mail put it more bluntly and succinctly than Maly ever has:
 &quot;I think you will be the cause of a report that accomplishes what I assume you set out to do - which is to show that a small number of people did a shitty job of investing a fund and that it did not have to be that way. This being Washington, the impact on me will be predictable,&quot; Nordin wrote to Maly, who provided a copy of the e-mail.
 John Nowell, the DEF's chief executive officer, also declined to argue the point. &quot;As for 'the DEF could have been better managed,' I can't say much,&quot; Nowell wrote in an e-mail reply to written questions. &quot;I suppose Winston Churchill could have been a better peacetime prime minister, and maybe Joan of Arc could have been more virtuous. I know I could have done a better job managing the DEF. I apologize.&quot;
 Nowell added that he believed everyone working for the DEF had &quot;done their best in a continuously tough environment.&quot; &quot;If you think it didn't work out, then it's my fault,&quot; he wrote. &quot;The successes belong to [the DEF's Moscow team]. The failures and shortcomings belong to me.&quot;
 Yet even while offering their mea culpas, the DEF managers say Maly is wrong on details. They insist they did do due diligence, use lawyers and handle money with care. And they explain their fund's poor performance by pointing out that it was in bad shape when they got it, and by arguing that similar investors in the unfriendly environment of late 1990s Russia have done as bad or worse.
 
 <b>'A Very Rough Start'</b>
 A tendentious early history of the U.S. Defense Enterprise Fund might go like this:
 The DEF set aside $2.9 million to invest in OrbitSoft, a startup designed to farm out the services of Russian computer programmers. But the DEF decided not to go forward and OrbitSoft was shut down. It put $800,000 into RAIES International, a venture that was going to use the expertise of nuclear labs to zap timber with radiation to sterilize it before export. That too was abandoned. The DEF put $2.5 million into KK Interconnect, a venture with Kazakhstan's National Nuclear Center to make consumer electronic devices - and KKI even came up with the World Connect, a universal modem adapter that made its way into the pages of the swank Sharper Image catalogs for $49.95. But KKI's isolated factory was hundreds of kilometers from the nearest airport, making shipping costs prohibitive. So the World Connect was another bust. &quot;Essentially KKI has had to reinvent itself,&quot; says the DEF's 1998 annual report. KKI's process of self-discovery has been an expensive one for U.S. taxpayers: In addition to the $2.5 million it got from the DEF, KKI got another $3.9 million directly from the Pentagon arm that oversees the DEF, the Defense Threat Reduction Agency. What's more, Oleg Gapanovich, a St. Petersburg-based DEF official, described visiting KKI with a colleague, Karen Westergaard, in 1998, and finding that &quot;half of the money [the DEF had invested] was lost&quot; because it had been used to pay a second company's debts. (Westergaard could not be reached.) These days, KKI is, among other things, assembling Samsung televisions for the Kazakh market.
 The DEF also toyed with going into business with an Alabama company, R&G International, to make vacuum tubes on the site of a St. Petersburg defense plant. R&G executives, however, complained about the legal and consulting fees the DEF was racking up on that project - a whopping $524,000, including $150,000 to Ernst & Young accountants and more than $250,000 to Steptoe & Johnson, a Washington law firm with one of its partners on the DEF's board of directors. The DEF board killed its $3 million investment into the vacuum-tube project. R&G sued, claiming the DEF wanted to punish it for pointing out the large legal and consultancy fees. The DEF's then-CEO, Kevin McDonald, agreed. He resigned, and wrote to the DEF board: &quot;I believe that a decision to stop funding this deal would indeed be a form of punishment against our U.S. partners [R&G] for their 'whistleblower' activities.&quot;
 This was the picture at the halfway point in the DEF's life span. Three years into its six-year existence, the most remarkable things the fund had to show was its eyebrow-raising legal and consultancy fees. A USAID analysis in 1997 found them larger than all but one of the other 10 Enterprise Funds - even though the DEF itself was one of the smallest of those funds. In 1995 and 1996, for example, the DEF paid Steptoe & Johnson $739,000 for legal services.
 Some of the above was covered in the Chicago Tribune, which took a long look at the DEF a few months after Congress held hearings on Enterprise Funds in 1997. That Tribune article, however, also held out the hope of a brighter future: Nowell and Nordin had just been brought in as the new brooms. Nowell conceded the DEF had had &quot;a very rough start&quot; and promised change.
 &quot;Under Nowell,&quot; the Tribune reported, &quot;the fund has moved into telecommunications and scrap metal deals that he says&quot; will turn matters around.
 As promised, the DEF did indeed move into telecoms and scrap metals. But among such projects were two of its more egregious missteps. It was a $9.65 million telecommunications venture called MPS-Telekom that dragged the DEF - and the U.S. departments of State, Commerce and Defense, and the Russian prime minister - into an agonizingly extended feud. And it was an ill-considered scrap metals deal called MZA that saw the DEF lose $5 million by loaning it to a dying French company.
 
 <b>$3 Million to a Restaurant?<b>
 More about MPS-Telekom and MZA in a moment; first, consider another up-and-coming project Nowell talked of once upon a time to the Chicago Tribune: RAMEC, a St. Petersburg-based computer manufacturer the DEF has put $6 million into.
 More accurately, the DEF put in $3 million for 40 percent of the company - but the money evaporated. So the DEF put in a panicky second transfusion of $3 million, this time as a loan, accompanied by a stern finger-wagging. In an interview, Nordin characterized the RAMEC project as &quot;a success, but a very expensive one.&quot; The Pentagon's August 2000 report estimated RAMEC's value at a mere $1 million, and stated not enough had been done to figure out what had happened to the other $5 million.
 Maly alleged in his letter to the State Department that RAMEC had &quot;reportedly&quot; diverted the first $3 million to build a restaurant in St. Petersburg. Gapanovich, a former member of the Russian parliament who oversaw DEF operations in St. Petersburg, agreed the fate of the first $3 million was a mystery.
 &quot;I can't say whether it was diverted to a restaurant, but I can say that from the very beginning the transfers of money were unprofessionally and poorly documented,&quot; Gapanovich said in an interview.
 Nordin said he knew nothing of any restaurants, but he did volunteer, &quot;We're convinced [the money] wasn't used the way it was supposed to be.&quot;
 &quot;[The RAMEC managers] are involved in lots of businesses, and they've had a hard time distinguishing between our money and their money,&quot; Nordin said in an interview a few months ago. Since then, the DEF and RAMEC have come to an agreement under which RAMEC will pay back the second $3 million loan with a mix of company shares and cash.
 
 <b>The Philosophers' Stone</b>
 So perhaps RAMEC is salvageable. The DEF has not always been so lucky.
 Electronic equipment includes miniscule amounts of precious metals like gold, palladium, silver and copper. In 1997, the DEF set aside $7.7 million to build a plant south of Moscow in Kaluga capable of extracting those precious metals from tons of electronic scrap each year. The plant - dubbed Metallurgichesky Zavod Ametist - was to be built by Valme Industries, an ailing French company in the European scrap-sifting business.
 Nordin said the DEF had hired the KPMG consulting firm to evaluate Valme as a partner. KPMG reported that Valme was fading fast. It had built a business in the 1960s recovering gold and such from electronic circuitry - back when such circuitry was cruder. As Europe grew more high-tech, Valme began to look East, to the Soviet bloc, where engineers still packed gobs of precious metals into electronics. 
 &quot;We knew Valme was in trouble,&quot; Nordin said. &quot;KPMG told us: Without [the DEF's MZA project] they were dead, with it they were fine.&quot;
 Armed with that urgent knowledge - and also with hope that the European Bank of Reconstruction and Development, a veteran of high-risk Russia investing, was on board - the project moved forward. &quot;The [MZA] project is funded in part by the EBRD, which is providing more than $14 million of the $23 million,&quot; announced the DEF's 1997 annual report.
 The description of MZA was accompanied by a photograph of gleaming bars of pressed gold and a quote from Yury Guzhavin, the Russian partner in the affair, to the effect that the DEF would bring to MZA &quot;the business experience that we need.&quot; 
 MZA was to employ 100 people who used to work in the military-industrial complex. Spending $23 million in public money to establish 100 new jobs works out to $230,000 per job. Had MZA turned out as billed, U.S. foreign aid critics might be now skeptically crunching those numbers - perhaps as part of President George W. Bush's review, announced last week, of U.S. military conversion programs in Russia - and then dubbing MZA one of the more expensive job-creation programs in history.
 But things never got so far. The DEF put $5 million into Valme's hands so it could build the plant - but Valme expired and those millions went right back out the door to its creditors. The EBRD put in nothing and watched from afar. What had happened?
 The DEF defensively picked up the story in the following year's annual report. (The DEF has not published annual reports for 1999 or 2000. Publishing such a report is required by the U.S. law establishing the DEF's original grant.) 
 MZA, the DEF's report explained, was killed off by a tag-team of villains: the ruble devaluation and the EBRD.
 &quot;The [MZA] project was brought to the DEF and sponsored by the EBRD,&quot; the report says. But then, the EBRD began playing dumb. The report complained of &quot;the [EBRD's] delaying tactic of repeatedly requesting additional information&quot; about MZA, and blamed such stalling for, among other things, Valme's business problems.
 Eventually the ruble crashed, the report says, making MZA &quot;uneconomical to continue.&quot; The report says the DEF has sent EBRD a $500,000 bill representing money spent &quot;on due diligence matters and project start-up on the recommendation of the EBRD.&quot;
 There are problems with the DEF's official explanation of how it lost millions in MZA. For starters, the devaluation of the ruble could only have made a raw materials extraction project like MZA more economical, not less. 
 The ruble devaluation would have reduced all ruble costs associated with building and running the gold-sifting plant - while it would not have affected the dollar-pegged revenues to be earned from selling that gold. 
 If MZA had been a winner before the 1998 ruble crash, it should have been far sexier afterward.
 
 <b>'Smart? Why're You Broke?'</b>
 The real problem with MZA is that it was a loser all along. E-mail traffic in and out of the DEF's offices in the summer of 1998 - copies of the e-mails were provided by Maly - sounds dispiritedly certain on this point.
 Consider this from investment officer Mike Rhodes of the DEF, here berating the French partners Valme for making lazy and unrealistic predictions about MZA: 
 &quot;My (your) problem is that you have not been able to do ANYTHING to prove to us or EBRD that the supply is there, that you know the suppliers, that you are capable of bringing in the supply, that you understand the Russian scrap market,&quot; Rhodes wrote to a Valme official in a June 19 e-mail, a copy of which Maly supplied. 
 &quot;If we had real supporting documentation for the numbers in our [business] plan, as we do for EVERY OTHER PROJECT that the DEF invests in, we would not be in this mess right now.&quot;
 This Valme official had just assured Rhodes that &quot;Valme knows its trade better than many others.&quot; Rhodes replied witheringly, &quot;If you know your trade so well, why are you bankrupt?&quot; 
 Rhodes went on to challenge Valme's assertion that it can truck 1,500 tons of scrap from across Russia to the Kaluga recovery plant with just two trucks. His back-of-the-envelop math suggests a need for at least six trucks. 
 Even then, Rhodes writes, he doesn't really see where the scrap is coming from. &quot;Our lack of a clear supply plan is a really poor situation,&quot; Rhodes wrote. &quot;If I were considering this project all over again right now, for this reason alone, I would walk away.&quot;
 
 <b>'Well-Meaning, but Naive'</b>
 So there's no clear supply of scrap, and even if there was, the e-mails show sharp disagreements over how much gold or palladium one could squeeze out of it. Valme is going bust back home. And on top of all this, world gold prices are sinking: Nordin says now that the DEF was banking on the idea that gold, already at record lows in 1996, would not go lower. But it did so steadily throughout MZA's brief life span - from an average of $387.87 per ounce in 1996 to just $292.90 in 1998.
 Never mind. A week after taunting the Valme team as bankrupt and stating that his preference would be to just &quot;walk away,&quot; Rhodes put on a brave face. He e-mailed EBRD senior banker Susan Goerans that the DEF &quot;has decided no longer to fight with&quot; a consultant it had hired &quot;to provide us a written [due diligence] report on the MZA project.&quot; 
 Rhodes wrote that the consultancy firm DEF had hired, Simplified Solutions, &quot;is currently focused on other engagements,&quot; and so was only offering verbal comments about whether MZA was viable. Rhodes admitted that this was &quot;an unacceptable situation,&quot; but insisted the MZA project was still a go. He said the DEF had done its own additional research, had incorporated its reluctant consultant's verbal comments and was ready to write its own due diligence report.
 Two weeks later, Elizabeth Ames, another DEF investment officer, was in London for a July 6 meeting with Goerans. Her mission: to get the EBRD to put in that $14 million. It did not go well. E-mails Ames wrote afterward suggest the EBRD was getting skittish.
 &quot;What does it mean when your own consultant won't commit their findings to paper?&quot; Ames quoted Goerans as having asked. In parentheses, Ames offered her own answer: &quot;It means you're doing business in Russia, where there's a different import to words on paper, and that the consultant doesn't get paid.&quot; When Goerans persisted, Ames wrote that she had replied, &quot;I'd be happy to give her our consultant's phone number, in no way are we blocking access to his expertise.&quot;
 Goerans declined to be interviewed, and neither Ames nor Rhodes could be located for this article.
 EBRD spokesman Richard Wallis said the EBRD's team walked away from MZA convinced DEF managers had been &quot;well-meaning but naive.&quot; 
 Whatever the DEF managers wrote in their annual report about grand $23 million partnerships with the EBRD, Wallis added, &quot;I certainly don't think we ever gave any commitments in writing - the sort that would be required to make such an investment, and that the DEF should have required before moving forward [to invest its own $5 million].&quot; 
 A representative of the EBRD who did not wish to be named added that in handling MZA, &quot;the DEF was trying hard to save costs, to do everything themselves, and did not hire outside [legal] counsel&quot; to advise them. 
 That echoes Maly's letter to the State Department's Taylor: Among his many criticisms, Maly complained that &quot;Nordin, who has a graduate degree in Russian studies and is a CFA [certified financial accountant], largely thought himself capable of doing without a lawyer.&quot; (Pity the DEF: In 1995 and 1996 it's being berated for spending too much on lawyers; a few years later it's accused of spending too little.)
 Nordin said in interviews that he always sought appropriate legal advice. He said this had been documented by investigations into the DEF's work. Otherwise, he said, the DEF board would not have allowed Nordin to remain in charge to this day of handling the investment portfolio.
 
 <b>'Unwinding' MZA</b>
 Having sunk $5 million into the quest for the Philosophers' Stone, the DEF's alchemists now busied themselves trying to get it back. But it was not meant to be. Almost all of the DEF's $5 million for MZA represented loans to Valme Industries. Some of them were backed by guarantees from a British insurance company called LIM. Nordin said the DEF had also hired KPMG to check out LIM, and KPMG gave it a clean bill of health - but that the Russian financial crash nevertheless brought down LIM, too.
 That meant trying to scrape back some of the lost $5 million from the bankruptcy sell-off of Valme. Ultimately, the DEF got nothing.
 There is a final $15,000 footnote. That is the amount Nordin says the DEF loaned to the Russian face of MZA, Guzhavin - the man who had so enthused about &quot;the business experience&quot; the Americans brought to the table.
 &quot;Mr. Guzhavin got sick. He needed a heart operation. We gave him an advance,&quot; Nordin said. &quot;Then the [MZA] deal fell apart. He couldn't repay the loan. We had to get out of this bad deal, and he helped us unwind it. So he worked off his loan doing that.&quot;
 
 <b>The DEF Goes Big-Time</b>
 But forget all of that. Nowell, in that Chicago Tribune look forward, also spoke of telecoms. And it was a telecom joint venture with the Railways Ministry that was the DEF's most ambitious endeavor - and most spectacular failure. 
 All of the utility monopolies in Russia are racing to get into the telecommunications business. The argument is that if you have rights-of-way along railway tracks, or natural gas pipelines, or the wires of the electric power grid, you can cheaply lay fiber-optic line - and get a whole second business. It's the great telecommunications land rush.
 The Railways Ministry has entertained a half-dozen such projects, and the flavor of the day is Trans-Telekom, a ministry-owned company that will lay the cables with Russian government money. 
 But early on, there was a drive to get Western investors to pay for it. In 1996 the Railways Ministry struck a $420 million deal with AT&T and New York-based Communications Development Corp. Via a 50-50 joint venture called MPS-Telekom, the Americans and Russians would wire up the nation. The DEF was a junior partner in this, putting in a few million dollars in return for a little equity. 
 Then AT&T got distracted by the spin-off of its Lucent Technologies, and dropped out of the deal. CDC followed it out the door soon after - and the DEF purchased the American half of MPS-Telekom, for about $6.3 million.
 The DEF had just bought itself into a punishing investment schedule. Documents provided by the Railways Ministry show that the DEF was on the hook to come up with $420 million over a five-year period: $56.5 million in 1996, $116.5 million in 1997, $159.5 million in 1998, $67.5 million in 1999 and $20 million in 2000.
 The DEF had nowhere near that kind of cash. But Nordin said he had an understanding with the Railways Ministry that the deal would be rejiggered - that his team would be given time to rework the plan and shop it around among the AT&Ts of the world. 
 In the meantime, the DEF put in another $3.3 million, and MPS-Telekom began pilot projects hanging hundreds of kilometers of fiber-optic cable.
 Nordin said his team came up with a viable plan and even had the World Bank's investment arm, the International Finance Corp., interested. But when the DEF submitted the plan to the Russians, they got a clipped letter in return - informing the DEF it was far behind its investment schedule, so all bets were off.
 <b>Going for a Double Play</b>
 The ensuing spat, which has never been reported, played out at the highest levels of the American and Russian governments. The DEF managed to mobilize the U.S. Commerce, Defense and State departments, and then-Secretary of State Madeleine Albright was prevailed upon to raise MPS-Telekom in a discussion with then-Prime Minister Yevgeny Primakov. Nordin said the DEF was asking for either a green light to go forward, or its money back.
 U.S. Ambassador James Collins is among those who tried to broker a deal between the DEF and the Railways Ministry. Asked a few months ago about MPS-Telekom, Collins said the dispute was mostly resolved and the Russians &quot;were trying to do the right thing.&quot; But he also put MPS-Telekom in a list of a handful of investments by Americans - a salmon fishing camp near Murmansk, the Subway sandwich shop in St. Petersburg - that are notorious among expatriates as cases of blatant expropriation. 
 It certainly sounds like a case of expropriation in the DEF's 1998 annual report: &quot;Because of the enormous potential value of the MPS-Telekom venture, the Russian partner has executed a series of delaying actions designed to force [the DEF] out.&quot; 
 Sorting out MPS-Telekom also involved hiring Valery Serov, the former deputy prime minister Maly says was paid in brown envelops, as a lobbyist. Railways Ministry officials shared letters Serov wrote to then-Deputy Prime Minister Alexei Bulgakov, lobbying him to put the Communications and Property ministries, and not the Railways Ministry, in charge of MPS-Telekom.
 &quot;[Nordin was trying to] get rid of a structure [the Railways Ministry] he couldn't agree with,&quot; said Sergei Pryanikov, an adviser to Railways Minister Nikolai Aksyonenko. 
 Pryanikov suggested Nordin thought he had &quot;better contacts&quot; at the Communications and Property ministries. 
 Serov declined to comment on his chosen tactics, but Nordin offered a possible explanation: He said Serov had already suggested the railways and gas monopolies were wrong to assume they had rights-of-way along their pipes and tracks. Nordin said Serov was probably going for a double play - getting MPS-Telekom sorted out and getting ownership of the rights-of-way defined.
 
 <b>'He's a Spy, It's on the Internet'</b>
 Railways Ministry officials tell a very different story. Pryanikov says the DEF fell behind on its investments, and then began demanding a new deal and stirring up a scandal.
 Pryanikov has never met Nordin, and only came to the MPS-Telekom problem late in the day. But he and his colleagues say they are now convinced the DEF was really a U.S. government covert operation working against Russia. Asked what kind of covert operation, Pryanikov was hazy. But he insisted, &quot;I'm convinced [Nordin is a spy]. I've seen some data and looked into this.&quot; 
 Pressed about that data, Pryanikov and Vyacheslav Smirnov - another adviser to the minister and a vice president of Trans-Telekom - divulged their source as &quot;the Internet,&quot; where Nordin's resume is posted. 
 &quot;It's confirmed, he is an espionage agent, but retired,&quot; said Smirnov, adding, &quot;But you know they say you only leave the espionage business feet-first.&quot;
 Nordin and Nowell are both former U.S. Army Rangers who studied Russian affairs together at Harvard. They have been good friends since they were occasional roommates in graduate school, and Nowell remembers helping to paint Nordin's grandmother's house. In fact, Nowell said one reason he took the post as DEF CEO was so that he could hire Nordin and work with him again.
 Nordin also studied the Russian military and Russian financial markets at the Rand Corp., where he worked on a doctorate in public policy analysis. Rand is a California-based think tank that does a lot of work for the U.S. intelligence community. Nordin's dissertation at Rand was: &quot;Liar's Poker, Russian Style - Regulatory Issues in Russia's Public Equity Markets.&quot; 
 To Pryanikov and Smirnov, this adds up to a pair of CIA agents, even if they did help each other paint Nordin's grandmother's house. At one point in the spat over MPS-Telekom, Pryanikov said, a group of deputy ministers even discussed &quot;kicking back&quot; against Nordin's full-court press - &quot;by letting a paper like MK [Moskovsky Komsomolets] or Kommersant have the story: An American spy, retired, tries to seize control of [Russian] infrastructure, he doesn't pay, he brings pressure to bear.&quot;
 Asked if they were spies, Nordin and Nowell offer both flippant and thoughtful answers. Nowell jokes about Nordin's &quot;secret decoder ring,&quot; and Nordin about secret agents who post their resumes on the World Wide Web. But both also say they knew the work of conversion was politically sensitive, and that they did everything they could not to provoke suspicions or bad feelings.
 In the end, this was also the instinct of the Russians. Pryanikov said the deputy ministers decided not to bother calling MK, and instead to try to get the DEF back its money. A turning point was apparently a lunch between Nordin and a Trans-Telekom vice president at the Harvard Faculty Club in 1999, during the annual U.S.-Russia Investment Conference.
 Trans-Telekom eventually bought up more than 600 kilometers of fiber-optic cable the DEF had already laid down, plus supporting technical documentation, for $8.6 million. Nordin and the Railways Ministry are still quibbling over some of that documentation, but mostly the matter is resolved. The DEF got away with a loss of about $1 million. 
 
 <b>'If Only I Spoke English'</b>
 Oleg Gapanovich, the DEF's man in St. Petersburg, was arguably the fund's most highly qualified expert on <i>konversia</i> - conversion of military industry to civilian use. As a delegate to the Congress of People's Deputies in 1990, he headed parliament's commission on the military-industrial complex and conversion. And in an earlier incarnation, during the Cuban Missile Crisis, Gapa no vich headed a team of Soviet military officers responsible for four nuclear warheads. His job would have been to arm the warheads before a potential launch. Thankfully, the launch orders never came, and Gapanovich went on to a successful military and engineering career as a ship designer. But ever since he has been fervently convinced of the need for cordial U.S.-Russian relations and for at least some level of demobilization.
 The job at the DEF, then, suited him well. But like Maly, Gapanovich came away disappointed. &quot;As to bad management, I'd agree,&quot; he said in an interview. Gapanovich even wrote to a member of the DEF's board of directors to lay out his concerns. But Gapanovich is at great pains not to have his letter associated with Maly's. He worries Maly's crusade has gone too far, and he spoke with distaste of Maly and the DEF management collecting dossiers against each other built upon <i>donosy </i>- the word used to describe tattletale reports filed with the old KGB. Moreover, Gapanovich prefers to defend Nordin, while Maly attacks him. &quot;Richard [Nordin] didn't have any assistance in technical matters, in economics. And he had to carry the burden for all. They all, every time, waited for Rich,&quot; Gapanovich said. At times, Gapanovich blames himself for not being more help. &quot;If only I spoke English,&quot; he sighed. (Nordin, by the way, speaks fine Russian.)
 Gapanovich remembers Nordin and Nowell as very excited about MPS-Telekom. &quot;They thought MPS-Telekom would be very profitable. They made video presentations about it, and went to [investment] conferences in America and England,&quot; he said. 
 The idea as Gapanovich remembers it was that a sexy telecom project was just what the DEF needed to sell its private fund. &quot;We needed some loud project to show - and MPS-Telekom was that thing, it was huge, it would make people say 'Whoa! I get it!'&quot; 
 So they signed a contract, but quickly fell behind schedule with investments. Gapanovich said he believed the contract was &quot;designed to have such hooks,&quot; and bemoaned that &quot;Richard had no one to read or study the contract. There were lawyers, but you have to look at the contract from the point of view of seeing ways you could get caught.&quot;
 Saddest of all to Gapanovich is that good, solid defense conversion projects have gone unrealized - first the fund was too slow off the ground, then too busy getting into and out of messes with RAMEC and MZA, then too excited about its monster telecom project, and now it is basically dormant. That leaves a widow Gapanovich's (and also Nowell's) favorite project: Vektor, a Novosibirsk biological agent factory the DEF team only got access to in mid-1998.
 Vektor has historically produced, among other things, anthrax. Now it has a business making children's yogurt drinks, and was hoping the DEF would help it move into pharmaceuticals production. Gapanovich says the DEF was all set to help out - right up until the fund slipped into hibernation.

TITLE: Savior of Nations: $150K/Year, Own Fund
PUBLISHER: Staff Writer
TEXT: How would you like the U.S. Congress to set you up with a six-figure salary, swank office space and a government-funded venture capital fund to play with - and then make it part of your job to fly around Europe and America trying to launch a second venture capital fund, this one a private affair you can own and operate yourself?
 If the private fund flies, then you can be like John Birkelund and Robert Faris, who are, respectively, the chairman of the board and the chief executive officer of the wildly successful Polish-American Enterprise Fund. Those two took $255 million from Congress, invested it and then used their record to leverage $450 million more from private sources, in part via a second fund owned by their team. 
 Along the way they introduced mortgage and small-business lending in Poland, made millions in profit and even eventually cut the U.S. Treasury a check for $120 million - giving them bragging rights as the only foreign aid program ever to pay Washington back (the nearest precedent is Finland paying off its post-World War II Marshall Plan assistance). The Polish Fund team also used its profits to establish a free-market think tank, the Polish-American Freedom Foundation, where Birkelund and Faris enjoy seats on the board.
 And if the private fund doesn't fly?<br> Well, you've been living the USAID-standard of $150,000 a year, plus housing, moving and travel expenses. You've had the heady experience of betting with millions, while taxpayers covered the risk. So you simply forget the private fund, and settle back to managing whatever has become of the government fund. There is some danger of being hung out to dry by journalists or politicians looking for the next foreign aid scandal - but if you've done everything honestly and competently and have been thoroughly audited over the years, you have done exactly as Congress asked. You should be fine.
 
 <b>The Aid Enterprise</b>
 That's how an Enterprise Fund works. Eleven such funds have made up a significant chunk of U.S. foreign aid to the former Soviet bloc. They have invested more than $1 billion in money drawn from Congress, and according to an article by Birkelund to be published soon in a foreign policy journal, they have leveraged another $1.3 billion in private capital.
 In political Washington, foreign aid programs are fat targets. Critics of the U.S. Agency for International Development, the U.S. government's main aid distributor, complain of &quot;welfare&quot; payments to foreigners with American tax money, or of projects that will deflate as soon as the taxpayer spigot is turned off. 
 Enterprise Funds are supposed to get around such obstacles. They offer not grants but hard-headed investments. They are designed to self-liquidate, by transferring their portfolio of investments to a private fund. <br> And in the name of &quot;continuity,&quot; the Enterprise Fund team is allowed to set up and own that lucky private fund - giving managers strong incentives to join for the long haul, and not just for a two- or three-year educational adventure abroad.
 It sounds logical - and startling. How can government officials set up and run a taxpayer-funded organization - even while all along planning to &quot;privatize&quot; it for themselves? <br> &quot;Would it not ordinarily be considered a conflict of interest?&quot; asked Doug Bereuter, a representative from Nebraska, at congressional hearings about Enterprise Funds in 1997.
 In reply, State Department official James Holmes conceded, &quot;We are in terra incognita.&quot; Holmes said, &quot;We do not know precisely where we have been or where we have to go, but we do know that one of the processes through which we have to go [with Enterprise Funds] is privatization.&quot;
 
 <b>Remembering Harvard</b>
 Consider another USAID program, the so-called Harvard Project. This was a team of economists and lawyers who helped author Russian economic policies. The Harvard Project went down in ignominy amid allegations its managers were using U.S.-funded resources and insider information to build and run their own investments and investment funds; and also amid questions about how the Harvard team could get non-competitive grants from USAID to the tune of $40 million, and also gain unprecedented control over the rest of the government's Russia aid portfolio. The U.S. Justice Department is suing Harvard University and the main actors of the Harvard project for $120 million.
 Winning noncompetitive access to USAID money, using government-funded resources and knowledge to build one's own private investments on the side - it sounds a lot like an Enterprise Fund. 
 Of course, one crucial difference is that Enterprise Funds had legal permission - indeed, a congressional imperative - to do those things. (Another major difference: Enterprise Funds are just investors, while the Harvard team was supposed to be standing above it all and designing the rules for the nation's investment systems.)
 The same Justice Department going after Harvard has opined that Enterprise Funds are exempt from conflict of interest law. So instead of sneaking around via Cyprus offshores or hiding behind their wives' maiden names, the Enterprise Funds hide their conflicts in plain sight. They discuss them freely.
 
 <b>Bow Ties & Business Plans</b>
 The key control mechanism is the board. Every Enterprise Fund has one. Board members are not paid in any way, and the chairman of the board is chosen by the U.S. president himself. The board hires a chief executive officer, who must build a team and invest the fund's money - and who can also start building a private company, which will eventually manage the government's business alongside its own.
 To head the board of the Defense Enterprise Fund, former President Bill Clinton appointed Randy Reynolds, the former head of Richmond, Virginia-based Reynolds Aluminum (now a part of Alcoa Aluminum). 
 The board in turn, after a couple of false starts, in 1996 tapped 38-year-old John Nowell - a man whose trademark red suspenders and bow ties provided part of the headline for a Financial Times profile of the DEF a few years back that noted they were armed with &quot;bow ties and business plans.&quot; 
 Nowell, now 43, brought in an old friend from Harvard and the U.S. Army, Richard Nordin, 47, and gave him the key job of running the government-funded investments out of Moscow. 
 Nowell focused his energies on cranking up the private fund. In Delaware he registered Global Partner Ventures, a company owned by him, Nordin and another DEF employee; Reynolds was a chairman of sorts at GPV, but again a non-compensated one.
 Soon Nowell, under the watchful eyes of Reynolds and the DEF board, had moved all activity over into GPV. DEF employees were fired on paper, then rehired to GPV, and the DEF board paid GPV a &quot;management fee&quot; of $3 million a year. Out of that, GPV paid salaries and expenses for 50-odd people (with the exception of Nordin and Nowell, who remained U.S. government employees). 
 There was no competitive bidding process. The DEF board - following the road map laid down by the Polish Fund and by Congress - waited for Nowell to create an investment fund manager from scratch, and then hired it. 
 With GPV up and running, Nowell and his bow ties began doing the rounds of FT interviews and European roadshows, trying to drum up $100 million for GPV's new NIS Transformation Fund (NIS for Newly Independent States, or former Soviet republics). 
 The NIS Fund, Nowell explained back then to the Financial Times, was necessary because the DEF itself was brimming over with desirable business. &quot;We [at the DEF] look at 1,000 pieces of paper a year, we uncover 300 bankable deals, and we fund 10,&quot; he said. &quot;With the new fund we may be able to back another 12.&quot;
 
 <b>'The Original Horse's Ass'</b>
 It didn't work. The private investors never coughed up. Perhaps they were skittish as some of the DEF's showcase investments - like the MZA gold-from-scrap project or the MPS-Telekom fiber-optic cable operation (see related article) - began to sputter. 
 Nor did Washington put in any more cash. Early on, there was talk of the DEF getting $150 million or so from Congress. Instead, it never moved beyond its original $67 million grant. It got most of that money from the Pentagon, and the Defense and State departments tossed the DEF back and forth like a hot potato. 
 &quot;It became an orphan,&quot; said Robert Odle, a lawyer for the DEF (and for several other Enterprise Funds). &quot;The foreign assistance people saw it as defense conversion and defense saw it as foreign assistance.&quot; (Odie talks about his enterprise fund work.)
 The DEF board, disappointed on all fronts, revoked the management contract from GPV and instead hired Russia Partners, a Moscow-based fund manager. The board now pays Russia Partners $2 million a year to husband its six investments, and Russia Partners has hired Nordin for that job. 
 Today, Nowell looks back ruefully from Richmond, Virginia, where he is, as he cheerfully volunteers, &quot;broke and unemployed.&quot;
 &quot;You are now corresponding with the original horse's ass,&quot; Nowell wrote in an e-mail. &quot;I really believed that we could take a 501 c3 charity [like the DEF] whose mission was to limit Russia's [weapons of mass destruction] effort, make all its enemies in Russia and on Capitol Hill love it, raise another $100 million from professional investors, and save the world while making beeeeg bucks for everybody.&quot;
 
 <b>'Busy, Happy, and Not in Iraq'</b>
 Matthew Maly, a project director laid off from the DEF, has now taken up a role as angry critic of it. He says Nordin and Nowell would rush headlong into bad investments - and argues they did so in part because they were eager to establish the private fund. 
 Nordin said in interviews that the DEF managers took all proper precautions and due diligence before every investment. But looking back, he does see room for improvement. He said he now believes the DEF/GPV team was overstaffed, in part because it was trying to manage companies &quot;by remote control&quot; - by buying minority stakes, then hiring DEF staff to try to influence company managers, instead of taking majority stakes and installing their own managers. 
 He also said the push for the NIS Transformation Fund was premature - and added that even had that private fund taken off, it would not have pursued the DEF's core mission of &quot;conversion&quot; because investments in that field are so risky.<br> Maly's complaints about the DEF launched an internal report that, among other things, rapped Nowell and Nordin for &quot;lavish&quot; lifestyles. Actually, their lifestyles seem no more or less cushy than those of any other senior USAID officials - which perhaps says more about American aid workers in general than the DEF team in particular.
 Both Nowell and Nordin earned $150,000 a year, plus benefits like housing. Nordin took an advance against his housing allowance of $96,000 a year to buy a Moscow apartment for himself. And all of the Americans at the DEF could play golf at the Moscow Country Club, where the DEF had purchased a charter membership for a one-off payment of $85,000. (Each executive also had to pay $2,000 a year out of his or her own pocket to make regular use of the greens.)
 Maly has asserted that DEF managers flew first class at taxpayer expense, but there is little evidence of this. Nowell said that his predecessor as CEO had once expensed tickets on - of all things - the Concorde. The ensuing storm of criticism convinced Nowell to tread carefully on expenses. He said both he and Nordin often used their own frequent flyer miles to upgrade to first class, but that as a rule no one billed first class to the DEF. Nowell cited an audit of DEF travel by the U.S. General Accounting Office, the budgetary watchdog of Congress, that found no irregularities.
 As an American citizen returning to Moscow in the early Boris Yeltsin years to help with economic reform, Maly's first job back in his homeland was as a $26-a-month adviser to the Economics Ministry. He remembers that as an outlandishly miniscule salary - but is just as unhappy with the other extreme he has seen, the American aid worker's expensive lifestyle.
 &quot;It may not seem like much if the DEF spends an extra $100 for a night in a hotel or an extra $3,000 for a plane ticket,&quot; Maly wrote to a lawyer investigating the DEF. &quot;But in terms of what could have been done with this money, it is a horrendous waste.&quot;
 A salary of $200 per month, Maly continued, is enough to keep many a Russian scientist &quot;busy, happy and not in Iraq.&quot; In other words, simply cutting a $96,000 housing allowance in half would free up annual salaries for about 20 military scientists - while still leaving $4,000 a month to rent a Moscow flat.

TITLE: Pope Prays for Peace in Mideast
PUBLISHER: Reuters
TEXT: GOLAN HEIGHTS, Syria - Pope John Paul, visiting one of the Holy Land's most bitterly contested places, Monday urged the region's people to be as merciful as their God, forgive past wrongs and commit themselves to peace.
 The Pontiff said the killing of a Palestinian baby girl in the Gaza Strip earlier in the day made his prayer for peace more intense.
 &quot;Mindful of the sad news of conflict and death which even today arrived from Gaza, our prayer becomes even more intense,&quot; he said.
 The Pope's appeal, made more poignant and pressing by his trembling voice, was made from the Golan Heights ghost town of Quneitra on a visit to Syria during which he had already made history by becoming the first Pontiff to enter a mosque.
 &quot;Blessed are the peacemakers, for they shall be called the children of God,&quot; the Pope said in a prayer just inside a Greek Orthodox church, which like the rest of the town was destroyed by withdrawing Israeli forces in 1974.
 Syria has not rebuilt the town but has left it as a macabre memorial to what Damascus calls Israeli atrocities.
 &quot;From this place, so disfigured by war, I wish to raise my voice in prayer for peace in the Holy Land and the world,&quot; the Pontiff said. &quot;Genuine peace is a gift from God. Our openness to that gift requires a conversion of heart and a conscience obedient to his law.&quot;
 Hundreds of people cheered the Pope as he walked slowly from his car to the church amid tight security. Many Golan refugees stood on the ruins of their razed houses as the Pope arrived.
 The crowd waved Vatican and Syrian flags, and the yellow flag of Lebanon's Islamist Hizbollah group was also seen.
 Outside the battered church, people held placards reading: &quot;Our people love peace and reject surrender.&quot;
 Mainly Muslim Golan refugees said the Pope's trip was an omen for peace.
 From Quneitra, the Pope could see Israeli military positions and radar posts on the other side of the Western Golan, which Israel captured in the Six Day War of 1967 and still occupies.
 He prayed that God's voice would &quot;resound in the hearts of all men and women, as you call them to follow the path of reconciliation and peace, and to be merciful as you are merciful.&quot;
 &quot;We pray to you for the peoples of the Middle East. Help them to break down the walls of hostility and division and to build together a world of justice and solidarity.
 &quot;Merciful Father, may all believers find the courage to forgive one another so that the wounds of the past may be healed and not be a pretext for further suffering in the present.
 &quot;May this happen above all in the Holy Land, this land which you have blessed with so many signs of your Providence, and where you have revealed yourself as the God of Love.
 The Pope urged the leaders of the war-scarred region to &quot;strive to satisfy their peoples' rightful aspirations, and educate the young in the ways of justice and peace.&quot;
 He also prayed for the leaders of Syria and asked God to &quot;grant them wisdom, farsightedness and perseverance.&quot;
 &quot;May they never yield to discouragement in their challenging task of building the lasting peace for which their people yearn,&quot; the prayer said.
 The Pontiff has made war and peace in the volatile region a crucial theme of his pilgrimage to Syria to retrace the steps of St. Paul, who converted to Christianity on the road to Damascus.
 John Paul made history on Sunday by becoming the first Pontiff ever to enter a mosque and pray in a Muslim place of worship.
 He used the visit to urge Christians and Muslims to forgive each other for the past, but he also heard a tirade against Israel by Syria's senior Muslim leader.
 The Pontiff, who revolutionized ties with the Jews by visiting Rome's synagogue in 1985, said it was now time to turn the page with Islam, too.

TITLE: Train Robber Biggs Back in British Jail
PUBLISHER: The Associated Press
TEXT: LONDON - Fugitive train robber Ronnie Biggs, one of the 20th century's most colorful criminals, returned home to Britain Monday and was promptly arrested by Scotland Yard, which had hunted him for years.
 The ailing 71-year-old Biggs, barely able to speak or move after a series of strokes, flew from Brazil aboard a jet chartered by the tabloid Sun newspaper, which reportedly bought the rights to exclusive interviews with Biggs.
 &quot;Got Him,&quot; said a banner headline in Monday's editions of the tabloid, with a full-page picture of Biggs in his wheelchair, wearing a cowboy hat.
 Dozens of police officers were on hand when the plane touched town at Northolt air base, west of London, and Biggs was whisked away in a van with blacked-out windows.
 Biggs, who was part of the gang that pulled off the infamous &quot;Great Train Robbery&quot; in 1963, was arrested aboard the plane by Scotland Yard detectives moments after landing. Within hours, he was back behind bars, after a brief court appearance to determine his identity.
 The Great Train Robbery went down in crime folklore at the time as the heist of the century. The then-record holdup of the Glasgow-to-London Royal Mail Train yielded 2.6 million pounds - worth $7.3 million at the time, or nearly $47 million today.
 During the robbery, engineer Jack Mills was hit over the head with an ax handle and never fully recovered - the only aspect of the crime about which Biggs ever expressed any public remorse.
 Caught and sentenced to 30 years in jail, Biggs made a daring escape after serving only two years, going over the wall of Wandsworth Prison in 1965. He fled to France, then to Australia and Panama, and, in 1970, to Rio de Janeiro.
 Most of Biggs' share of the train loot was spent on his escape, flight and plastic surgery to change his appearance. It was widely speculated that he was giving himself up at last to get free medical care.
 Scotland Yard tracked him down in 1974, but the lack of an extradition treaty with Brazil saved him. When Brazil's military government tried to deport him, Biggs produced a son by a Brazilian woman - Michael, 26, who accompanied him on the flight home - which gave him legal grounds to stay.
 When Brazil's Supreme Court in 1997 rejected an extradition request on grounds the statute of limitations had run out, Biggs seemed a free man.
 But strokes left him debilitated and barely able to speak. Lately, he rarely left his Rio home except for twice-a-week physical therapy sessions.
 His only regrets, he said, were the estrangement from his first wife, Charmian, and the injury of Mills, the train engineer, who died of cancer in 1970.

TITLE: WORLD WATCH
TEXT: Stadium Collapses
 

SARI, Iran (Reuters) - Two men died Monday from injuries they received when metal awnings collapsed onto fans at a soccer stadium in northeast Iran Sunday under the weight of hundreds of spectators perched on top.
 Officials in the town of Sari said nearly 300 people had been injured when the metal girders supporting the awning slowly buckled and fell onto the fans below. Some of the injured were still in critical condition.
 Some 30,000 people were crammed into the stadium which has an official capacity of only 10,000. Many also clambered onto the roof, officials said.
 Doctors said one of the dead men had suffered severe head injuries. The second man, a university student, died in intensive care later Monday, also from head injuries.
 
 
Serbs Trap Diplomats
 

BANJA LUKA, Bosnia (Reuters) - Thousands of rioting Bosnian Serb nationalists have trapped top Western diplomats, including the head of the UN mission to Bosnia in a building, a UN spokesperson said.
 UN mission head Jacques Klein and other officials were trapped by the mob after up to 2,000 Serb protesters started throwing tear-gas grenades, stones and eggs on Muslims and officials who were in town to mark the re-construction of a mosque destroyed during Bosnia's 1992-95 war.
 Muslims had applauded when Klein arrived at the site. But his arrival prompted an outburst of anger from gathered Serbs, who broke a police cordon to attack Muslims across the road, forcing people and officials to take refuge in a building.
 According to local sources in Banja Luka, Bosnian Serb Prime Minister Mladen Ivanic is due to negotiate with protesters to let out the people trapped in the Islamic community's building. 
 
 
ETA Blamed for Killing
 

MADRID (Reuters) - A regional leader of Spain's ruling Popular Party (PP) was shot dead Sunday in an attack immediately blamed on the Basque separatist group ETA, a week before key elections for the Basque parliament, officials said.
 Manuel Gimenez, president of the party in the northern region of Aragon, was hit in the head by two or three bullets as he walked with his 16-year-old son to a soccer match in the city of Zaragoza in northern Spain, a government spokesperson said.
 The killing drew quick condemnation from across the political spectrum.
 Basque regional President Juan Jose Ibarretxe said both the ruling Basque Nationalist Party (PNV) and the PP had suspended Monday's scheduled campaign events.
 Carlos Iturgaiz, PP president in the Basque region, told state television that ETA was trying to intimidate voters.
 
 
817 Bid for President
 

TEHRAN (Reuters) - A record 817 people have signed up to run in Iran's presidential elections next month, the official IRNA news agency reported on Sunday.
 But only a handful are expected to be cleared to stand in the June 8 polls by the conservative Guardian Council, which screens aspirants according to strict Islamic criteria.
 The council approved only four of some 240 people who bid for the presidency in the last election in 1997.
 Reformist President Mohammad Khatami is seeking re-election and is widely expected to win in the absence of any serious challenger from the rival conservative camp.
 Some members of Khatami's cabinet, including Defense Minister Admiral Ali Shamkhani, are among the hopefuls, as are an array of low-key conservative personalities.
 The popular Khatami, deeply frustrated by the conservative opposition to his liberal reform program, has said he is running reluctantly.
 A conservative clampdown has seen some key allies of Khatami removed from office, sympathetic newspapers banned and fellow reformers jailed.
 
 
Freedom Demanded
 

HONG KONG (AP) - More than 100 university academics signed a petition Monday demanding Beijing release an American business professor detained and put under investigation for espionage.
 Li Shaomin, a U.S. citizen who taught at the City University of Hong Kong, disappeared after crossing the border into China on Feb. 25 to see a friend.
 Li's wife, Liu Yingli, said Chinese authorities have given no explanation for his detention. "I honestly believe that he has done nothing wrong. All he did was to pursue his research," she told a news conference Monday.
 The Hong Kong academics issued their petition on the eve of a visit to the territory by Chinese President Jiang Zemin for an economic conference beginning Monday. The petition said Li's arrest, as well as recent detentions of other writers and scholars, had chilled academics. 
 
 
Rebel Attack
 

LUANDA, Angola (AP) - In their boldest attack in months UNITA rebels overran a town near the capital, killing 79 people and interrogating foreign aid workers, officials said Monday.
 About 200 rebels attacked Caxito, a town of 50,000 people about 35 miles north of Luanda, at dawn on Saturday, the army said in a statement.
 The statement did not provide casualty figures but an aid official in Luanda who was in contact with colleagues in Caxito said 79 people, including soldiers, police officers and civilians, were killed. The official spoke on condition his name not be used. The dead were all Angolans.
 Rebel officers questioned aid workers from the United States, Canada, France, the Netherlands, Brazil and Hungary, according to the statement.
 The foreign were "very traumatized," the official said. Their identities were not immediately available. They were working for an Angolan aid group, known by its Portuguese acronym ADPP.
 
 
Supervised Drug Use
 

SYDNEY, Australia (AP) - Behind frosted glass windows, Australian heroin users injected themselves for the first time in an officially sanctioned center that provides clean needles, counseling and medical staff, authorities said on Monday.
 Australia's first supervised drug injecting center opened Sunday night in the heart of Sydney's seedy Kings Cross strip-club district.
 The church-run center, which features stainless steel booths, free-syringe dispensers and a medical treatment room, is on an 18-month trial aimed at reducing drug-overdose deaths. 



TITLE: Lakers Down Kings To Open 2nd Round
PUBLISHER: Reuters
TEXT: NEW YORK - The NBA playoffs are enjoying an infusion of new blood, but the first weekend of conference semifinal action produced just one win from a quartet of second-round upstarts when the Toronto Raptors drew first blood against the Philadelphia 76ers Sunday. 
 The Dallas Mavericks, Sacramento Kings and Raptors find themselves in relatively uncharted territory as the three, along with the Charlotte Hornets, sent perennial playoff powers the Utah Jazz, New York Knicks, Miami Heat and Phoenix Suns off to the golf course early.
 The Kings are in the second round for the first time in 20 years and the Mavericks are in the conference semis for the first time since 1989. The Raptors are getting their first taste after the first playoff series win in the franchise's brief history.
 
 <strong>Los Angeles Lakers 108, Sacramento 105. </strong>As his teammates celebrated their first-round win over Phoenix, Sacramento's All-Star forward Chris Webber had things in perspective: &quot;Now we get one day of sleep and then we got to go and mess with the big boys.&quot;
 It was the biggest of boys who manhandled the Kings on Sunday as Sacramento felt the full brunt of a &quot;Shaq attack&quot; in game 1 against the defending NBA champions.
 Lakers superstar center Shaquille O'Neal had a monster game with 44 points, 21 rebounds - 11 off the offensive glass - and seven blocked shots in Los Angeles' 108-105 victory.
 &quot;The guy is unbelievable,&quot; Kings coach Rick Adelman said of O'Neal. &quot;He's learned how to use his skills as well as his bulk and height. When he's coming in to you, you have to give ground.&quot;
 Calling O'Neal &quot;a handful,&quot; Adelman will try to figure out some way to counteract Shaq before game 2 Tuesday night.
 &quot;Whatever they throw at me I'll be ready,&quot; O'Neal said.
 
 <strong>Toronto 96, Philadelphia 93. </strong>Two career-defining games by Toron to All-Star swingman Vince Carter helped the Raptors deny the Knicks their 10th consecutive trip to the second round.
 Still flying high after Friday's game 5 win in New York, Carter again carried his team, scoring 10 of his 35 points in the fourth quarter as Toronto held off the top-seeded Sixers 96-93.
 &quot;They caught us off guard and they played with great intensity still on a high from beating the Knicks,&quot; said Sixers coach Larry Brown.
 
 <strong>San Antonio 94, Dallas 78. </strong>The Mavericks, coming off a stunning overtime win in Utah that eliminated the Jazz in five games, got a healthy dose of reality Saturday when they were pounded 94-78 by the San Antonio Spurs. 
 &quot;They are the best defensive team in basketball,&quot; Dallas coach Don Nelson said. &quot;We don't expect it to be easy.&quot; 
 The victory was a costly one for the Spurs, however, who lost starting guard Derek Anderson for at least three weeks. Anderson, who was averaging better than 15 points a game for San Antonio, suffered a separated shoulder when he was sent crashing to the floor on a hard foul by Juwan Howard.
 
 <strong>Milwaukee 104, Charlotte 92. </strong>Charlotte produced the most stunning of first-round results with three blowouts in a sweep of the defensive-minded Heat.
 But after eight days off, the rusty Hornets ran into a Milwaukee Bucks team Sunday that not only could run with them, but possessed far more firepower than Miami, and Charlotte succumbed 104-92.
 &quot;We knew they were off for a while, longer than us, so we wanted to come out and play great basketball,&quot; said Ray Allen, whose Bucks led by as much as 22 points.
 The Hornets battled back to within four, but Allen, who led Milwaukee with 26 points, took over at crunch time.
 Charlotte guard David Wesley promised a better showing in game 2.
 &quot;Tuesday we won't get down by 20 points,&quot; he said. &quot;We needed to get back into it after our layoff. Tuesday you'll see us play a full 48 minutes.&quot;

TITLE: AS Roma Remains On Top in Serie A
PUBLISHER: Combined Reports
TEXT: TURIN, Italy - Japanese substitute Hidetoshi Nakata inspired Serie A leaders AS Roma to a late comeback that gave them a 2-2 draw at Juventus in the top-of-the-table clash Sunday. 
 Roma now leads second-placed Lazio by five points, while Juve slipped to third, a further point adrift, with five matches remaining. 
 Juventus was poised to close the gap at the top when it led 2-0 with 11 minutes to go following strikes by Alessandro Del Piero and Zinedine Zidane. 
 But Nakata, who replaced Fran cesco Totti on the hour, turned the game around in the final stages and his contribution may prove to be crucial in deciding the destiny of the title. 
 Eleven minutes from the end he fired home a spectacular 30-meter drive and then, in the last minute, Juventus goalkeeper Edwin Van der Sar could only parry another fierce shot from the Japanese midfielder and Vincenzo Montella pounced for the equalizer. 
 Juventus had made a dream start when Del Piero put them ahead in the fourth minute with a glancing near-post header from Zidane's cross. 
 
 <strong>Spain. </strong>Real Madrid, despite a 3-0 loss Saturday to Celta, still moved closer to its 28th title when No. 2 Deportivo de La Coruna could only muster a 1-1 draw at Rayo Vallecano Sunday. 
 Madrid has 69 points with five matches to play followed by Deportivo (61), Valencia (59), Mallorca (56) and Barcelona (53). 
 Vicente del Bosque's side could secure the title in two weeks if Deportivo fails to gain maximum points from its next two matches. 
 Rayo took the lead in the 55th minute through Jon &quot;Bolo&quot; Perez's brilliant side-footed volley from Angel Alcazar's long pass. Midfielder Juan Valeron equalized 14 minutes later. 
 Real Madrid's 3-0 defeat at Celta Saturday capped a poor week. It tied 1-1 at home with Osasuna last weekend and then lost 1-0 at home to Bayern Munich in the Champions League semifinal first leg four days later. 
 No. 4 Mallorca went down 1-0 at lowly Osasuna Sunday. Valencia, which plays its Champions League semifinal second leg against Leeds United on Tuesday, struggled to beat a nine-man Real Sociedad 2-1 Saturday with goals from Pablo Aimar and Zlatko Zahovic. 
 Fifth-place Barcelona played a dull goalless draw at crosstown rival Espanyol Saturday. 
 
 <strong>England. </strong>In the First Division, Huddersfield, 2-1 losers at home against Birmingham, was relegated to the Second Division on Sunday. Queens Park Rangers and Tranmere had been previously demoted from the First Division. Huddersfield became the third club as Portsmouth and Crystal Palace both picked up wins on Sunday. 
 Portsmouth won 3-0 at home over Barnsley, and Crystal Palace was a 1-0 winner at Stockport. Huddersfield, playing at home, needed a draw to stay up. 
 Grimsby, which also could have gone down, won 1-0 at home over the First Division champions Fulham. 
 At the top, Fulham and Blackburn earlier won automatic promotion to the Premier League with Bolton, West Brom, Preston and Birmingham facing a playoff to secure the third promotion spot to the Premier League. 
 
 <i>- Reuters, AP </i>

TITLE: Sorenstam Gets Back on Track With Win at Chick-Fil-A
PUBLISHER: The Associated Press
TEXT: STOCKBRIDGE, Georgia - Annika Sorenstam didn't waste any time getting started on a new winning streak.
 Sorenstam birdied five of the last six holes in regulation, then beat Sophie Gustafson on the second playoff hole Sunday to win the Chick-fil-A Charity Championship.
 Sorenstam already has won five tournaments this year - in just eight events - and became the first female golfer to eclipse $7 million in career earnings.
 Trailing by four strokes as she came to the 13th hole, Sorenstam took heart from overcoming a 10-shot deficit on the final day for her last victory at Los Angeles.
 That day, she forced a playoff with Mi Hyun Kim and won on the first hole, capping an amazing four-tournament winning streak.
 This time, she needed two extra holes to finish off Gustafson, a fellow Swede who was seeking her second straight victory at Eagle's Landing Country Club south of Atlanta.
 &quot;What's scary about her is that she doesn't make mistakes,&quot; Gustafson said. &quot;You know that you've got to beat her. She's not going to crumble.&quot;
 Sorenstam started with her worst stretch of the weekend, bogeying the first two holes after beginning the final round one shot behind leaders Gustafson, Beth Daniel and Heather Daly-Donofrio.
 &quot;I didn't want that to be my Sunday,&quot; Sorenstam said. &quot;I asked my caddie if I could go back to sleep and start over again.&quot;
 Instead, she rallied for a 5-under-par 67 and totaled a 13-under 203 for the three-day tournament, forcing a sudden-death playoff with Gustafson.
 Both players started with birdies at the par-5 18th, repeating their performance from the 54th hole of regulation. But Gustafson hooked an 8-iron in the water at the next playoff hole, No. 10.
 Sorenstam put her shot safely in the middle of the green and two-putted for the $180,000 victory, boosting her career earnings to $7,140,264. She also improved her career playoff record to 10-3.
 &quot;I'm overwhelmed,&quot; said Sorenstam, only 30 years old but already the winner of 28 tournaments. &quot;I've put in a lot of hard work and to see the results so quickly is great.&quot;
 Sorenstam challenged Nancy Lopez's LPGA record of five straight victories in March and April. The Swede also has two runner-up finishes, meaning she's been first or second in every event but one.
 Top that, Tiger.
 Sorenstam took a week off after her winning streak was snapped with a 43rd-place finish in the Longs Drugs Challenge. She returned with a methodical, textbook performance that included a rare burst of emotion.
 Sorenstam got back in contention with a streak of four straight birdies, beginning at the par-5 13th. She was right on target with her short irons, setting up three straight putts of less than 10 feet.
 Then she made her biggest shot of the day, rolling in a 23-foot downhill putt for birdie at 16. Sorenstam pumped her fist twice and actually ran toward the cup to retrieve the ball before regaining her composure.
 Gustafson bounced back from a double-bogey at No. 1 to close with 68. But a bogey at 14 - when she couldn't get up and down from an awkward lie in the bunker - provided an opening to Sorenstam.
 On the second playoff hole, Gustafson had 125 meters to the flag from the middle of the fairway, but she chunked an 8-iron shot into the lake that curls around the left side of the green.
 &quot;I was caught between an 8- and 9-iron,&quot; said Gustafson, 0-2 in playoffs. &quot;I just didn't swing my 8-iron with much confidence today.&quot;
 Foreign golfers won the first 10 events on the tour this year, a streak that ended last week with Rosie Jones' victory in Texas. Sorenstam snuffed out that brief run by the Americans, then downplayed its significance.
 &quot;I see competitors,&quot; she said. &quot;It doesn't matter what country they're from.&quot;

TITLE: Austria Shocks U.S. at Worlds
PUBLISHER: The Associated Press
TEXT: COLOGNE, Germany - Backup goalie Rick DiPietro gave up three goals in the final period, including a short-handed goal that broke open the deadlock, as the United States lost 3-0 to Austria at the World Hockey Championship on Sunday. 
 The win was one of the biggest for Austria ever in international hockey, though it was too little, too late for the hockey minnows, who were already out of contention for the quarterfinals. The United States had already clinched its place in the round of eight heading into the match. 
 In Hanover, Ottawa Senators' Alexei Yashin scored his first goal in a month, leading Russia to a 2-1 comeback win over Switzerland, solidifying its chances of a place in the quarterfinals. 
 For the Austrians, the win over the NHL-stacked American squad was a much-needed ego-soother, after recording just one other win - against underling Japan. It had also just come off an embarrassing 11-0 loss to Sweden, the biggest rout so far in the tournament. 
 Goalie Reinhard Divis, who gave up eight goals against the Swedes, stopped 40 shots. 
 &quot;You got to give their goalie credit,&quot; said DiPietro. &quot;Austria played a great game. I'm impressed with their effort. 
 &quot;We had a couple of opportunities, but it didn't bounce our way.&quot; 
 With the U.S. on the power play, defenseman Peter Kasper moved fast on a two-on-one, wristing the puck past DiPietro at 4:56 to give Austria the lead. 
 The Austrians also had plenty of other scoring chances. Before the second goal, ex-Canadian Tom Searle hit the crossbar. Late in the second period during an Austrian power play, veteran defenseman Eric Weinrich cleared the puck on the goalline. 
 &quot;We wanted to really work hard, get our confidence back and show everybody that Austrian hockey is better than it was against Sweden,&quot; Kasper said. &quot;I think that's what we did out there. I think the Americans underestimated us.&quot; 
 Dieter Kalt made it 2-0 less than three minutes later after a dazzling individual move and Gunther Lanzinger beat DiPietro again after a solo breakaway at 8:31 to end the scoring. 
 The Americans wrap up qualifying-round play Tuesday against last year's finalist Slovakia. Its quarterfinal opponent Thursday has yet to be determined. 
 &quot;Winning or losing today doesn't mean anything if we lose on Thursday in the quarterfinals,&quot; said American head coach Lou Vairo. &quot;And we don't want to go home on Friday. We want to stick around a while. 
 Sweden tops the Group F standings with seven points while Finland is second with six. The Americans sit third with five, ahead of Slovakia with four. The Austrians have only two and Ukraine has none. 
 The Czech Republic leads the Group E rankings with seven points, just ahead of Canada, also with seven but a weaker goal differential. Russia's victory over Switzerland left it third with four points, though it is not yet assured a place in the next round. Germany also has four points, while Italy has two and the Swiss have none, their loss to Russia eliminating them. 
 &quot;I'm very happy with the result and the victory,&quot; said Russian head coach Boris Mikhailov. &quot;We needed this win and I asked my players to play very strict and careful in defense. After our losses to Canada and the Czechs this was very difficult but they fulfilled my task.&quot; 
 Russia has struggled against the top teams this tournament, losing 5-1 to Canada and a disappointing 4-3 to defending Olympic and world champion Czech Republic. 
 The team is eager to make up for last year's worlds when its star-studded squad - which included Yashin - finished a mortifying 11th place. 
 Yashin - whose last goal dates back to the National Hockey League's regular season when he scored against Toronto on April 7 - picked up a brilliant pass from Pavel Datsyuk before sending a knee-high wristshot inside the left post past goalkeeper Martin Gerber with just 26 seconds left in the second period. 
 Underdog Switzerland had surprised the Russians, lighting the scoreboard first just 4:41 into the match when Mathias Seger sent a wraparound pass to Michel Riesen, who drove the puck between goalie Maxim Sokolov's pads. 
 Russia took until 2:32 into the second period to retaliate when Valery Karpov's slapshot from the bottom of the left circle found the back of the net. 
 Displaying more than a hint of desperation, the Swiss collected a whopping 31 penalty minutes compared to four for well-behaved Russia. 
 It was a disappointing result for the Swiss, who had finished in the top eight for the last three years. 
 In other play in Hanover, two-time defending champions Czech Republic crushed Italy 11-0. The Czechs had already secured their place in the quarterfinals but worked hard for the extra goals in case of a future goal-differential tiebreak. 
 Italy can still advance if it defeats Switzerland in its final qualifying-round match and Russia defeats Germany. 
 In later play in Cologne, Finland punished Ukraine 7-1.

TITLE: Mussina Triumphant in Return to Camben Yards
PUBLISHER: Reuters
TEXT: BALTIMORE - The New York Yankees completed a four-game sweep of the Baltimore Orioles with a 2-1 victory Sunday. Mike Mussina won in his return to Camden Yards and Scott Brosius hit what amounted to his second game-winning homer in three days to spur the defending World Series champions to a hard-fought triumph. 
 After spending the first 10 years of his major league career in an Orioles uniform, Mussina signed a six-year, $88.5 million contract with the Yankees in the off-season, and was booed throughout Sunday's contest. However, the right-hander allowed just one run and six hits in seven innings, striking out three with a pair of walks.
 Despite not being overpowering, Mussina (3-3) kept Baltimore off-balance all afternoon with an assortment of off-speed pitches.
 Almost sure to depart after escaping a seventh-inning jam by getting Brook Fordyce to bounce into a double play, Mussina watched as Brosius gave him the run he was looking for.
 The New York third baseman hit a 1-1 delivery from Mike Trombley deep into the left-field seats leading off the top of the eighth inning. It was Brosius' third homer of the series as he also led off the eighth in Friday's contest with a home run that resulted in a 6-5 victory.
 
 <strong>Anaheim 3, Detroit 2. </strong>In Anaheim, California, Darin Erstad singled in the 10th inning to put the winning run in scoring position and Garret Anderson delivered a bases-loaded single to plate the winning run as the Anaheim Angels posted a 3-2 victory over the Detroit Tigers.
 The Angels did not let their first extra-inning contest of the season drag on, striking quickly in the 10th inning against Detroit reliever Danny Patterson (2-1).
 
 <strong>Toronto 11, Seattle 3. </strong>In Seattle, Darrin Fletcher homered twice and Raul Mondesi hit a three-run shot as the Toronto Blue Jays became the first team this season to win a series from the Seattle Mariners with an 11-3 romp.
 Fletcher hit his first homer of the season in the fourth inning to give the Blue Jays a 5-2 lead and added a two-run shot to cap the scoring in the seventh.
 
 <strong>Cleveland 10, Tampa Bay 3. </strong>In St. Petersburg, Florida, the Cleveland Indians scored six runs in the eighth inning and posted their eighth straight victory, a 10-3 triumph over the Devil Rays.
 Marty Cordova and Einar Diaz had two-run doubles in the eighth for the Indians, whose last eight-game winning streak was April 7 to 17, 1999.
 
 <strong>Chicago Cubs 3, Los Angeles 2. </strong>In Chicago, Todd Hundley's single in the bottom of the ninth inning scored Gary Matthews Jr. with the winning run as the Cubs completed a three-game sweep of the Dodgers at Wrigley Field for the first time in nearly 30 years.
 
 <strong>San Diego 8, Cincinnati 2. </strong>In Cincinnati, Rickey Henderson opened the game with a double and moved into 29th place all-time on the hit list as the San Diego Padres posted their fourth straight win, an 8-2 triumph over the Cincinnati Reds.
 Henderson got San Diego going in the first with his 2,931st hit and in the process moved past Hall of Famer Rogers Hornsby and into a tie with Jake Beckly. Henderson, who scored twice to draw within 55 of Ty Cobb's major league record, also extended his hitting streak to 11 games.
 <i>
 (Please see Scorecard for more results.) </i>

TITLE: Williams Takes Victory in WTA Event in Easy Fashion
PUBLISHER: Reuters
TEXT: HAMBURG, Germany - Top seed Venus Williams took just 54 minutes to overcome surprise finalist Meghann Shaughnessy, 6-3, 6-0, Sunday and win the $565,000 WTA event in Hamburg.
 Williams, who collected a check for $90,000, was never troubled by the No. 7 seed, who failed to come to terms with the superior fire power of her fellow American.
 Although Shaughnessy competed on equal terms at the start, staying in the rallies and covering the net well, she was let down by her serve.
 A double-fault gave Williams break point in the second game, which she followed up with a spectacular backhand winner down the line to lead 2-0.
 Although Shaughnessy broke back in the next game, another double-fault at 3-2 gave Williams a break point.
 A backhand error put Williams 4-2 ahead, and worse was to follow when Shaughnessy double-faulted a third time to drop her serve at the start of the second set.
 Williams, who admitted she has drastically reduced her practice time at tournaments to guard against further problems with tendinitis in her knees, was satisfied with her week's work.
 &quot;I had to play well to have the scores that I did this week because I've played them all before and had some crazy scorelines,&quot; Williams said. 
 
 q
 Spain's Alberto Martin won the $500,000 clay-court Mallorca Open with a 6-3, 3-6, 6-2 victory over Argentine Guillermo Coria Sunday.
 The hard-hitting Martin, who beat local favorite Carlos Moya in the semifinals, started off strongly and broke the Argentine's serve in the second game.
 The next six games went with serve to leave Martin with 5-3 lead. He then served out the ninth game to love to take the first set in 36 minutes.
 Martin lost just four points on his serve in the first set and looked to have the measure of the young Argentine who had beaten him in three close sets in the quarterfinal of the Monte Carlo Masters.
 But the 19-year-old settled in the second set and went 40-15 up in the sixth game on the Martin serve.
 Martin double-faulted allowing Coria to take a 4-2 lead and with the remaining games going with serve the Argentine took the second set 6-3.
 The 22-year-old Spaniard continued to run hard across the court and looked in danger of tiring, but he recovered the rhythm on his serve and looked more focused than his opponent in the final set.
 Coria, continually pressured on his serve, saved a break point in the sixth game of the third set, but then double-faulted to go 4-2 down.
 Martin, playing his first final of the season, used his powerful backhand to the full and sprinted across the clay surface to return everything Coria could throw at him.
 He continued to hold his serve with ease and then broke the Argentine's serve once again to win the final set 6-2 and take his third career title, having won tournaments in Casablanca and Bucharest in 1999.

TITLE: Potvin Shuts Out Avs in 2-Overtime Thriller
PUBLISHER: Reuters
TEXT: LOS ANGELES - The Los Angeles Kings forced a decisive seventh game in their Western Conference semifinal series with a 1-0 victory over the Colorado Avalanche on Sunday.
 Glen Murray scored 2:41 into double overtime to end a goaltending duel between Patrick Roy and Felix Potvin on the game's 65th shot.
 After settling a pass from Nelson Emerson at the Colorado blue line, Murray moved in a couple of strides and unleashed a shot from above the right face-off circle.
 After the puck dipped, Roy partially blocked it with his right pad but could not stop it from entering the cage as the Staples Center erupted.
 &quot;They always say shoot a rolling puck,&quot; said Murray, who has four goals in this series after he was kept scoreless in the first round against Detroit.
 Written off after losing games 3 and 4 at home, Los Angeles rallied behind Felix Potvin, who has shut out the Avalanche for 164 minutes, 28 seconds.
 He made 33 saves on Sunday night for his seventh career playoff shutout.
 On Wednesday, he will lead them into their first seventh game since they defeated Toronto in the 1993 Campbell Conference finals.
 Colorado has lost a seventh game in each of the last three years, getting eliminated by Dallas in the Western Conference finals in 1999 and 2000 and by Edmonton in the first round in 1998.
 Hart Trophy favorite Joe Sakic returned for the Avalanche after missing most of the previous three games with a right shoulder injury.
 But he could not help Colorado end its scoring drought and appeared to aggravate the injury on a couple of hard hits in the first overtime.

TITLE: Monarchos Challenges History in Derby Win
PUBLISHER: The Associated Press
TEXT: LOUISVILLE, Kentucky - Secretariat's Kentucky Derby record was challenged but not broken by Monarchos, and that pleases trainer John Ward.
 &quot;I hope it's never broken, I'm just glad we came close to it,&quot; Ward said after Monarchos won the Derby in 1:59 4/5, just two-fifths of a second off the track record set in 1973.
 &quot;The track was blazing fast,&quot; Ward said. &quot;Earlier in the day I was concerned, but then I thought we all have to race across the same strip. So it made it more comfortable.&quot;
 The racing surface was too fast to suit Todd Pletcher, trainer of Invisible Ink, who finished second 4 3/4 lengths behind Monarchos.
 &quot;Based on the way the track was playing, I thought there was a decent chance they would break the track record. My only beef is you come in for two weeks and train over a track that is different than the one you race on.&quot;
 Ward said jockey Jorge Chavez told him: &quot;'John, I could have broken the record. I could have gone faster.' I said, 'Jorge thank goodness you didn't do that. You saved the horse.'&quot;
 As to whether Monarcos can join Secretariat and 10 others as Triple Crown champions, Ward said, &quot;I'm cautiously optimistic.&quot;
 He said he would go to Pimlico, site of the Preakness on May 19, on Monday or Tuesday to look things over and that he planned to send Monarchos there Wednesday.
 &quot;I want to get this horse over there as soon as possible,&quot; Ward said. &quot;This horse does better in familiar surroundings.&quot;
 Although no first-place finisher in a Derby has ever been disqualified, Ward said he was concerned when John Velazquez, Invisible Ink's jockey, claimed foul against Monarchos, contending the winner interfered with his colt passing the quarter pole.
 &quot;'I did nothing, I did nothing,'&quot; Ward said Chavez told him. The stewards agreed that nothing was done that altered the finish.
 Ward said when he found that Invisible Ink was involved in the foul claim, he thought &quot;Mr. Oxley is going to make the [winner's] stand with or without me.&quot;
 John C. Oxley is sole owner of Monarchos and he owns 24 percent of Invisible Ink.
 Monarchos is expected to have eight or nine rivals in the Preakness, but the only Derby starters in the race are expected to be the Bob Baffert-trained pair of Congaree, who finished third, and favored Point Given, who was fifth. There is an outside chance Songandaprayer, who was 13th, might try the Preakness.
 Trainer Todd Pletcher said he would take Invisible Ink and Balto Star, who finished 13th, to New York and think about the Belmont Stakes. He could have a Preakness starter in Distilled, winner of the Illinois Derby.
 &quot;Balto Star had a minor heat stroke after the race,&quot; Pletcher said. &quot;It was nothing too bad, but he's a little dehydrated.&quot;
 Other possible Preakness starters include Mr. John, Griffinite, Buckle Down Ben, Marciano and Percy Hope.
 Ward said a victory celebration was held at the Napa River Grill.
 &quot;The whole restaurant came unglued when Chavez walked in,&quot; Ward said. &quot;I had to be introduced.&quot;